produces and sells lumber that can be sold to outside customers or within the company to the Construction Division. The following data have been gathered for the coming period: Lumber Division: Capacity 200,000 board feet Price per board foot P2.00 Variable production cost per bd. f. P1.00 Variable selling cost per bd. f. P0.40 Construction Division: Board feet needed 60,000 Outside price paid per bd. $ P1.60 If the Lumber Division sells to the Construction Division, P0.30 per board foot can be saved in shipping costs. If current outside sales are 130,000 board feet, what is the minimum transfer price that the Lumber Division could accept?
produces and sells lumber that can be sold to outside customers or within the company to the Construction Division. The following data have been gathered for the coming period: Lumber Division: Capacity 200,000 board feet Price per board foot P2.00 Variable production cost per bd. f. P1.00 Variable selling cost per bd. f. P0.40 Construction Division: Board feet needed 60,000 Outside price paid per bd. $ P1.60 If the Lumber Division sells to the Construction Division, P0.30 per board foot can be saved in shipping costs. If current outside sales are 130,000 board feet, what is the minimum transfer price that the Lumber Division could accept?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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produces and sells lumber that can be sold to outside customers or within the company to the Construction Division. The following data have been gathered for the coming period: Lumber Division: Capacity 200,000 board feet Price per board foot P2.00 Variable production cost per bd. f. P1.00 Variable selling cost per bd. f. P0.40 Construction Division: Board feet needed 60,000 Outside price paid per bd. $ P1.60 If the Lumber Division sells to the Construction Division, P0.30 per board foot can be saved in shipping costs. If current outside sales are 130,000 board feet, what is the minimum transfer price that the Lumber Division could accept?
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