Questions: What is the minimum transfer price that the repair division should obtain for its services, assuming it is operating at capacity? P 28.50 per hour P 30.00 per hour P 48.00 per hour What is the maximum price the management division should pay? P 28.50 P 30.00 P 48.00 If the repair division has idle capacity, what is the minimum transfer price that the repair division should obtain? P 28.50 P 30.00 P 48.00
Questions: What is the minimum transfer price that the repair division should obtain for its services, assuming it is operating at capacity? P 28.50 per hour P 30.00 per hour P 48.00 per hour What is the maximum price the management division should pay? P 28.50 P 30.00 P 48.00 If the repair division has idle capacity, what is the minimum transfer price that the repair division should obtain? P 28.50 P 30.00 P 48.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Questions:
What is the minimum transfer price that the repair division should obtain for its services, assuming it is operating at capacity?
What is the minimum transfer price that the repair division should obtain for its services, assuming it is operating at capacity?
P 28.50 per hour
P 30.00 per hour
P 48.00 per hour
What is the maximum price the management division should pay?
P 28.50
P 30.00
P 48.00
If the repair division has idle capacity, what is the minimum transfer price that the repair division should obtain?
P 28.50
P 30.00
P 48.00
Transcribed Image Text:Canada, Inc. operates two divisions: a management division that owns and managers cruise ships in the
Visayas; and a repair division that operates a dry dock in Dumaguete City. The repair division works on
company ships, as well as other large-hull boats.
The repair division has an estimated variable cost of P 28.50 per labor-hour. The repair division has a two
year backlog of work for outside owner ships. They charge P 48.00 per hour for labor, which is standard
for this type of work. The management division complained that it could hire its own repair workers for P
30.00 per hour (including leasing work area).
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