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Please post the full calculation process

Please post the full calculation process

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please post the full calculation process.

Modtech is an electronics company that has two divisions, King and Jolly. King sells one specific type of chip internally to Jolly at a transfer price of £108 made up as follows: Direct materials £15 Direct labour Factory overheads £40 Total cost 35% mark-up Price 450 400 £25 350 300 250 £80 Transfer price The Jolly Division incurs further variable costs of £50 per item and estimates the following potential sales at various possible selling prices: £28 £108 Quantity 1,200 1,700 2,200 2,700 3,200 That's Correct Correct. Company 300. Revenues 300 x 2,700 = 810,000 revenues. Company costs (2,700 x (50+50)) = 270,000. Company contribution 810,000 270,000 = 540,000. What are the prices which maximize contri Jolly 350. Revenues 350 x 2,200 = 770,000. Jolly costs 2,200 x 50 347 600. Contribution 770,000 - 347,600 O a. 250 for the company and 300 for Jolly.= 422,400. Ⓒb. 300 for the company and 350 for Jolly. ✔✔ O c. 350 for the company and 400 for Jolly. O d. 400 for the company and 450 for Jolly.
Transcribed Image Text:Modtech is an electronics company that has two divisions, King and Jolly. King sells one specific type of chip internally to Jolly at a transfer price of £108 made up as follows: Direct materials £15 Direct labour Factory overheads £40 Total cost 35% mark-up Price 450 400 £25 350 300 250 £80 Transfer price The Jolly Division incurs further variable costs of £50 per item and estimates the following potential sales at various possible selling prices: £28 £108 Quantity 1,200 1,700 2,200 2,700 3,200 That's Correct Correct. Company 300. Revenues 300 x 2,700 = 810,000 revenues. Company costs (2,700 x (50+50)) = 270,000. Company contribution 810,000 270,000 = 540,000. What are the prices which maximize contri Jolly 350. Revenues 350 x 2,200 = 770,000. Jolly costs 2,200 x 50 347 600. Contribution 770,000 - 347,600 O a. 250 for the company and 300 for Jolly.= 422,400. Ⓒb. 300 for the company and 350 for Jolly. ✔✔ O c. 350 for the company and 400 for Jolly. O d. 400 for the company and 450 for Jolly.
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