Question 2 Capstone Company has two divisions. The Bottle Division produces products that have variable costs of $3 per unit. It has annual production of 200,000 units. 160,000 units of the products are sold to outsiders at $5 per unit and 40,000 units to the Mixing Division. The fixed costs of the Bottle Division are $125,000 per year. There was no beginning or ending inventories during the year. Mixing sells its finished products to outside customers for $11.50 per unit. Mixing has variable costs of $2.50 per unit in addition to the costs from the Bottle Division. The annual fixed costs of Mixing were $85,000. There was no beginning or ending inventories during the year. Required: a) How much should be the minimum transfer price: (i) if market for the products from Bottle Division is perfectly competitive? (ii) if intermediate market exists that is not perfectly competitive, and the Bottle Division has no unused capacity?

Question 2 Capstone Company has two divisions. The Bottle Division produces products that have variable costs of $3 per unit. It has annual production of 200,000 units. 160,000 units of the products are sold to outsiders at $5 per unit and 40,000 units to the Mixing Division. The fixed costs of the Bottle Division are $125,000 per year. There was no beginning or ending inventories during the year. Mixing sells its finished products to outside customers for $11.50 per unit. Mixing has variable costs of $2.50 per unit in addition to the costs from the Bottle Division. The annual fixed costs of Mixing were $85,000. There was no beginning or ending inventories during the year. Required: a) How much should be the minimum transfer price: (i) if market for the products from Bottle Division is perfectly competitive? (ii) if intermediate market exists that is not perfectly competitive, and the Bottle Division has no unused capacity?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Royal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban Greengrow Selling price per unit $ 10.00 $ 31.00 Variable expenses per unit $ 2.40 $ 10.00 Traceable fixed expenses per year $ 130,000 $ 31,000 Last year the company produced and sold 38,000 units of Weedban and 20,500 units of Greengrow. Its annual common fixed expenses are $101,000. Required: Prepare a contribution format income statement segmented by product lines.
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Jayleen Company makes two products: Carpet Kleen and Floor Deodorizer. Operating information from the previous year follows. Carpet Kleen Units produced and sold Machine hours used Sales price per unit Variable cost per unit 4,000 4,000 $ 6 $4 Floor Deodorizer 3,000 1,500 $ 12 $ 10 Fixed costs of $39,000 per year are presently allocated equally between both products. If the product mix were to change, total fixed costs would remain the same. The contribution margin per machine hour for Floor Deodorizer is:
Required information [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $75 per unit in two geographic regions-the East and West regions. The following information pertains to the company's first year of operations in which it produced 46,000 units and sold 42,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense $ 644,000 $ 388,000 The company sold 31,000 units in the East region and 11,000 units in the West region. It determined that $200,000 of its fixed selling and administrative expense is traceable to the West region, $150,000 is traceable to the East region, and the remaining $38,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it…
Royal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban Greengrow Selling price per unit $ 9.00 $ 37.00 Variable expenses per unit $ 3.00 $ 13.00 Traceable fixed expenses per year $ 134,000 $ 36,000 Last year the company produced and sold 45,000 units of Weedban and 17,000 units of Greengrow. Its annual common fixed expenses are $107,000. Required: Prepare a contribution format income statement segmented by product lines.
Diego Company manufactures one product that is sold for $72 per unit in two geographic regions-the East and West regions. The following information pertains to the company's first year of operations in which it produced 55,000 units and sold 50,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Profit will Fixed manufacturing overhead Fixed selling and administrative expense $ 23 $ 14 $3 $5 The company sold 37,000 units in the East region and 13,000 units in the West region. It determined that $290,000 of its fixed selling and administrative expense is traceable to the West region, $240,000 is traceable to the East region, and the remaining $77,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to produce any amount of its only product. $ 770,000 $ 607,000 15. Assume the…
Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Selling price per unit Variable expenses per unit Traceable fixed expenses per year Product Weedban $ 9.00 $ 2.50 $ 135,000 Greengrow $33.00 $ 13.00 $ 49,000 Last year the company produced and sold 36,500 units of Weedban and 16,500 units of Greengrow. Its annual common fixed expenses are $111,000. Required: Prepare a contribution format income statement segmented by product lines. Total Company Product Line Weedban Greengrow
[The following information applies to the questions displayed below] Diego Company manufactures one product that is sold for $80 per unit in two geographic regions-the East and West regions. The following information pertains to the company's first year of operations in which it produced 40,000 units and sold 35,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense $24 $14 $2 $4 $ 800,000 $ 496,000 The company sold 25,000 units in the East region and 10,000 units in the West region. It determined that $250,000 of its fixed selling and administrative expense is traceable to the West region, $150,000 is traceable to the East region, and the remaining $96,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to…
Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban Greengrow Selling price per unit S 10.00 S 31.00 Variable expenses per unit $ 3.10 $ 13.00 Traceable fixed expenses per year $ 135,000 S 47,000 Last year the company produced and sold 36, 500 units of Weedban and 17,000 units of Greengrow. Its annual common fixed expenses are $105,000. Required: Prepare a contribution format income statement segmented by product lines.
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