Please type your answer to this question in the space below and show your work for maximum points. Be sure to indicate which part(s) of the question you are answering. Materials used by the Stanley Company's Division 1 are currently purchased from outside supplier at $59 per unit. Division 2 is able to supply Division 1 with 18,000 units at a variable cost of $43 per unit. The two divisions have recently negotiated a transfer price of $49 per unit for the 18,000 units. (a) By how much will each division's income increase as a result of this transfer? (b) What is the total increase in income for Stanley?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
