Peppertree Company has two divisions, East and West. Division East manufactures a component that Division West uses. The variable cost to produce this component is $1.59 per unit; full cost is $2.00. The component sells on the open market for $5.09. Assuming Division East has excess capacity, what is the lowest price Division East will accept for the component? What is the highest price that Division West will pay for it?
Q: Viking Corporation’s variable cost per unit produced is $100. Wholesaler Y offers to buy 2,000…
A: Special order are those orders that are not frequent in nature. They are orders placed rarely by…
Q: Chang Industries has 1,500 defective units of product that already cost $44 each to produce. A…
A: Period cost means which are not directly included in the process of production. General and…
Q: The Can Division of Concord Corporation manufactures and sells tin cans externally for $ 0.70 per…
A: Formula: Minimum transfer price = Unit variable cost - Selling internally will save cost
Q: Cox Electric makes electronic components and has estimated the following for a new design of one of…
A: Spreadsheet Model for Cox Electric ProfitHere's a breakdown of the spreadsheet model to find Cox…
Q: Logan Company produces two products, Standard and Premier. Logan can sell all of the Standard and…
A: Production capacity = 220,320 machine hours Contribution margin per unit Standard = $24 Premier =…
Q: Peppertree Company has two divisions, East and West. Division East manufactures a component that…
A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…
Q: The EKTA’s main competitor does not manufacture their bicycle frames. They purchase the frames from…
A: The manufacturing cost is the cost of converting raw material into finished goods. It includes the…
Q: Bradley Company sells a product that has variable costs of $54 each and a sales price $79 each.…
A: Break even analysis and contribution margin analysis is an important tool in cost volume profit…
Q: Cox Electric makes electronic components and has estimated the following for a new design of one of…
A: Dear student, below is an answer to your assignment on constructing a spreadsheet model for Cox…
Q: Division A makes a part that it sells to customers outside of the company. Data concerning this part…
A: Lets understand the basics. When transfer happens between the various departments of the company…
Q: Carla Vista Company is able to currently sell all of the units that it can produce of either A132 or…
A: Contribution margin is excess of sales over variable costs. Then, fixed costs are deducted from…
Q: Swan Company has two divisions, Hill and Paradise. Hil 5,600 units from an outside supplier for $62.…
A: Solution: Paradise will save = Outside purchase price - Transfer price = 62 - 48 = $14 per unit
Q: Braizen, Inc. produces a product with a $30 per-unit variable cost and an $80 per-unit sales price.…
A: CVP analysis is considered a decision-making tool that helps management to make strategies and take…
Q: Ignite Products is a price-taker. The company produces large spools of electrical wire in a highly…
A: Desired profit :— It is the calculated by multiplying amount of investment by % return on…
Q: Holiday Corp. has two divisions, Quail and Marlin. Quail produces a widget that Marlun could use in…
A: Transfer price is the one at which the goods from one division can be transferred to the other. It…
Q: Company E has two divisions, Division A and Division B. Division A is currently buying Component X…
A: When the transfer price is based on the full cost based, then Transfer price can be calculated by…
Q: The marketing manager of Perez Corporation has determined that a market exists for a telephone with…
A: Variable cost per unit is the per unit value incurred on the making of the goods which is variable…
Q: Medlock Company has two divisions, Wheel and Chassis. The Wheel Division manufactures a wheel…
A: Transfer price is the amount which is charged by another department for producing the goods and…
Q: ncroft currently manufactures a subcomponent that is used in its main product. A supplier has…
A: Short-term profit alone does not provide a comprehensive view of a company's overall financial…
Q: Division A, which is operating at capacity, produces a component that currently sells in a…
A: TRANSFER PRICING Transfer price is the price for goods and services, at which these are transferred…
Q: Avery Company has two divisions, Polk and Bishop. Polk produces an item that Bishop could use in its…
A: Solution a: Operating profit will increase by = (outside purchase price - variable cost per unit) *…
Q: Holiday Corp. has two divisions, Quail and Marlin. Quail produces a widget that Marlin could use in…
A: Full cost of $7.10 is irrelevant cost because the production in excess capacity will only incur…
Q: Hazel Company makes an unassembled product that it currently sells for $55. Production costs are…
A: Incremental Analysis :— This analysis shows the comparison between two different alternatives. A…
Q: The Wood Division of Swifty Corporation manufactures rubber moldings and sells them externally for…
A: CVP analysis is considered a decision-making tool that helps management to make strategies and take…
Q: Valmont Company developed a new industrial piece of equipment called the XP-200. The company is…
A: 1. If Valmont uses absorption cost-plus pricing, the price it will establish for the XP-200 can be…
Q: The marketing manager of Jordan Corporation has determined that a market exists for a telephone with…
A: MARGINAL COSTING INCOME STATEMENTMarginal Costing Income Statement is One of the Important Cost…
Q: Bates Company plans to add a new item to its line of consumer product offerings. Two possible…
A: The contribution margin is calculated as difference between sales and variable costs. The net income…
Q: The Fluffy Company manufactures slippers and sells them at $12 a pair. Variable manufacturing cost…
A: “Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: Holiday Corporation has two divisions, Quail and Marlin. Quail produces a widget that Marlin could…
A: Introduction:- This question deals with the concept of transfer pricing, which is the pricing…
Q: Thornton Industries has 2,700 defective units of product that already cost $28 each to produce. A…
A: Sunk cost: Sunk costs are those costs which an entity has already incurred and cannot be recovered.…
Q: Cox Electric makes electronic components and has estimated the following for a new design of one of…
A: Break even point is the level of sales at which the firm's operating profit is zero. In other words,…
Q: The Comfy Company manufactures slippers and sells them at $11 a pair. Variable manufacturing cost is…
A: (Note: “Since you have posted multiple questions, we will provide the solution only to the first…
Q: The Slate Company manufactures and sells television sets. Its assembly division (AD) buys television…
A:
Q: Keller Company sells product ZR101 for $25 per unit. The cost of one unit of ZR101 is $18. The…
A: As per the lower-of-cost-or-net realizable value method, we need to recognize the cost of the…
Q: Sony manufactures and sells television sets. Its assembly division (AD) buys television screens from…
A: Transfer pricing is a mechanism which equates cost and prices between divisions in an organization
Q: he Wood Division of Sheridan Company manufactures rubber moldings and sells them externally for $55.…
A: Internal transfer means where one independent department is transferring the goods to another…
Q: Cox Electric makes electronic components and has estimated the following for a new design of one of…
A: Answer:- Profit model:- A profit model will take into account all expenses and income related to a…
Q: Company E has two divisions, Division A and Division B. Division A is currently buying Component X…
A: Division A has excess capacity therefore there will be no opportunity cost. The cost-based transfer…
Q: Company E has two divisions, Division A and Division B. Division A is currently buying Component X…
A: Total cost=Variable cost + Fixed cost
Q: The Can Division of Sheffield Corp. manufactures and sells recyclable containers externally for…
A: Transfer price is synonymous with transfer cost. It refers to the price at which related parties…
Q: Peppertree Company has two divisions, East and West. Division East manufactures a component that…
A: If East division has excess capacity, the lowest price the east division will accept is to recover…
Q: ost of $15 per pou
A: When management is weighing options, such as whether to increase production, alter the production…
Q: Glide Behind Corporation manufactures and sells small cargo trailers. The Wheel Division creates…
A: Variable costs are costs that varies with the change in the level of output whereas fixed costs are…
Q: Cox Electric makes electronic components and has estimated the following for a new design of one of…
A: Spreadsheet Model for Cox Electric ProfitHere's the spreadsheet model to find Cox Electric's profit…
Q: Company E has two divisions, Division A and Division B. Division A is currently buying Component X…
A: Full cost transfer price = variable cost + fixed costs
Peppertree Company has two divisions, East and West. Division East manufactures a component that Division West uses. The variable cost to produce this component is $1.59 per unit; full cost is $2.00. The component sells on the open market for $5.09.
Assuming Division East has excess capacity, what is the lowest price Division East will accept for the component? What is the highest price that Division West will pay for it?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Cox Electric makes electronic components and has estimated the following for a new design of one of its products: Fixed Cost = $7,000 Material cost per unit = $0.15 Labor cost per unit = $0.10 Revenue per unit = $0.65 Production Volume = 12,000 Per-unit material and labor cost together make up the variable cost per unit. Assuming that Cox Electric sells all it produces, build a spreadsheet model that calculates the profit by subtracting the fixed cost and total variable cost from total revenue, and answer the following questions. (a) Construct a one-way data table with production volume as the column input and profit as the output. Breakeven occurs when profit goes from a negative to a positive value; that is, breakeven is when total revenue = total cost, yielding a profit of zero. Vary production volume from 5,000 to 50,000 in increments of 5,000. In which interval of production volume does breakeven occur? to units (b) Use Goal Seek to find the exact breakeven point. Assign Set cell:…Vista Company manufactures electronic equipment. It currently purchases the special switches used in each of its products from an outside supplier. The supplier charges Vista $5.20 per switch. Vista 's CEO is considering purchasing either machine A or machine B so the company can manufacture its own switches. The projected data are as follows: Machine A Machine B Annual fixed costs $ 582, 450 $ 792, 100 Variable cost per switch 1.67 0.75 Required: 1. For each machine, what is the minimum number of switches that Vista must make annually for total costs to equal outside purchase cost? 2. What volume level would produce the same total costs regardless of the machine purchased? 3. What is the most profitable alternative for producing 230,000 switches per year and what is the total cost of that alternative?Logan Company produces two products, Standard and Premier. Logan can sell all of the Standard and Premier products it can produce, but it has limited production capacity. Machine hours per unit for Standard is 4 hour and for Premier is 6.0 hours. The company has 226,800 machine hours available. Contribution margin per unit is $24 for Standard and $30 for Premier. What is the total contribution margin if Logan chooses the most profitable sales mix? Multiple Choice $1,760,000. $1,360,800. $1,910,000.$2,310,000. $1,300,000. Please don't give solution in image
- Answer the following questions. 1. Dalton Computers makes 5,500 units of a circuit board, CB76 at a cost of $250 each. Variable cost per unit is $170 and fixed cost per unit is $80. Peach Electronics offers to supply 5,500 units of CB76 for $230. If Dalton buys from Peach it will be able to save $15 per unit in fixed costs but continue to incur the remaining $65 per unit. Should Dalton accept Peach's offer? Explain. 2. TX Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information: (Click the icon to view the information.) TX Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. Should TX Manufacturing replace the old machine? Explain. Relevant COSIS. Variable costs per unit Avoidable fixed costs per unit Purchase price per unit Unit relevant cost Cash operating costs Current disposal value of old machine Cost of new machine $ Total relevant costs 170 15 $ 185 $ 230 230 Dalton Computers should…Value Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 32,000 parts is $90,000, which includes fixed costs of $30,000 and variable costs of $60,000. The company can buy this part from an external supplier for $5 per unit and avoid 10% of the fixed costs. If Value Electronics decides to outsource the production of the part, how will it impact its operating income? A. Operating income increases by $97,000. B. Operating income decreases by $100,000. C. Operating income decreases by $97,000. D. Operating income increases by $100,000.Sweet Acacia Inc. makes unfinished bookcases that it sells for $58. Production costs are $38 variable and $9 fixed. Because it has unused capacity, Sweet Acacia is considering finishing the bookcases and selling them for $72. Variable finishing costs are expected to be $7 per unit with no increase in fixed costs. Prepare an analysis on a per-unit basis that shows whether Sweet Acacia should sell unfinished or finished bookcases. (If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) Sales per unit Variable cost per unit Fixed cost per unit Total per unit cost Net income per unit The bookcases 69 $ Sell ✓processed further. LA GA Process Further $ $ Net Income Increase (Decrease)
- Cox Electric makes electronic components and has estimated the following for a new design of one of its products. . Fixed cost $27,000 Material cost per unit - $0.17 Labor cost per unit $0.11 Revenue per unit = $0.68 Note that fixed cost is incurred regardless of the amount produced. Per-unit material and labor cost together make up the variable cost per unit. Assuming that Cox Electric sells all that it produces, profit is calculated by subtracting the fixed cost and total variable cost from total revenue. Construct an appropriate spreadsheet model to find the profit based on a given production level and use the spreadsheet model to answer these questions, (a) Construct a one-way data table with production volume as the column input and profit as the output. Breakeven occurs when profit goes from a negative to a positive value; that is, breakeven is when total revenue the total cost, yielding a profit of zero. Vary production volume from 0 to 100,000 in increments of 10,000. In which…Pharoah Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows. Direct materials Direct labor Variable overhead Fixed manufacturing costs (a) Pharoah' market research department has recommended an introductory unit sales price of $28.00. The selling expenses are estimated to be $432,000 annually plus $2.00 for each unit sold, regardless of manufacturing method. Capital-Intensive $4.00 per unit $5.00 per unit $3.00 per unit $2,284,000 Calculate the estimated break-even point in annual unit sales of the new product if Pharoah Company uses the: 1. Capital-intensive manufacturing method. Labor-intensive manufacturing method. 2. Labor-Intensive $4.50 per unit $7.00 per unit $4.00 per unit $1,437,000 Break-even point in units Capital-Intensive Labor-IntensiveCox Electric makes electronic components and has estimated the following for a new design of one of its products. Fixed cost = $23,750 • Material cost per unit = $0.17 • Labor cost per unit = $0.11 • Revenue per unit = $0.66 Note that fixed cost is incurred regardless of the amount produced. Per-unit material and labor cost together make up the variable cost per unit. Assuming that Cox Electric sells all that it produces, profit is calculated by subtracting the fixed cost and total variable cost from total revenue. Construct an appropriate spreadsheet model to find the profit based on a given production level and use the spreadsheet model to answer these questions. (a) Construct a one-way data table with production volume as the column input and profit as the output. Breakeven occurs when profit goes from a negative to a positive value; that is, breakeven is when total revenue = the total cost, yielding a profit of zero. Vary production volume from 0 to 100,000 in increments of 10,000.…
- Valmont Company has developed a new industrial piece of equipment called the XP-200. The company is considering two methods of establishing a selling price for the XP-200-absorption cost-plus pricing and value-based pricing. Valmont's cost accounting system reports an absorption unit product cost for XP-200 of $9,300. Its markup percentage on absorption cost is 85%. The company's marketing managers have expressed concerns about the use of absorption cost-plus pricing because it seems to overlook the fact that the XP-200 offers superior performance relative to the comparable piece of equipment sold by Valmont's primary competitor. More specifically, the XP-200 can be used for 18,000 hours before replacement. It only requires $1,900 of preventive maintenance during its useful life and it consumes $165 of electricity per 900 hours used. These figures compare favorably to the competing piece of equipment that sells for $18,000, needs to be replaced after 9,000 hours of use, requires $3,800…Valmont Company has developed a new industrial piece of equipment called the XP-200. The company is considering two methods of establishing a selling price for the XP-200-absorption cost-plus pricing and value -based pricing. Valmont's cost accounting system reports an absorption unit product cost for XP-200 of $ 9,400. Its markup percentage on absorption cost is 85%. The company's marketing managers have expressed concerns about the use of absorption cost- plus pricing because it seems to overlook the fact that the XP-200 offers superior performance relative to the comparable piece of equipment sold by Valmont's primary competitor. More specifically, the XP-200 can be used for 19,000 hours before replacement. It only requires $2,000 of preventive maintenance during its useful life and it consumes $170 of electricity per 950 hours used. These figures compare favorably to the competing piece of equipment that sells for $19,000, needs to be replaced after 9, 500 hours of use, requires…Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $12. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the market-based transfer price? • Variable cost per unit $10 • Fixed cost per unit 1.16 • Division B sales price of Component X 14.50