Ray Division of Vaugh Corporation produces electric motors. This product is currently sold to outsidecustomers but is needed by Alpha, another division of Vaugh. Ray Division's estimated sales andstandard cost data for the year ended December 31, based on practical capacity of 60,000 units are asfollows:Sales7,200,000Less: Variable Cost3,300,000Contribution Margin3,900,000Fixed Cost1,075,000Operating Income2,825,000Ray has an opportunity to sell 12,000 units to Alpha. Alpha can purchase the units it needs from outsidesupplier for 92 each.REQUIREMENTS:1. Assuming that Ray can normally sell 57,000 units to outsider customers, compute the maximumtransfer price.2. Assuming that Ray can normally sell 57,000 units to outsider customers, compute the minimumtransfer price.

This question deals with the concept of transfer price. Transfer price comes into picture when one…

Answered: Ray Division of Vaugh Corporation…

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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Vacation Corporation produces a single product. Data concerning the company's first year of operations appear below: Units produced 10,000 Units sold 9,000 Selling price per unit Р60 DM P15 DL Р5 Variable OH P2 Variable selling and administrative P4 BED EXAS Fixed OH P200,000 Fixed selling and administrative P70,000 Compute for the difference in net operating income between absorption costing and variable costing for the year.
Required information [The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): $ 15,000 9,000 6,000 3,120 Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 2,880 6. If the selling price increases by $2 per unit and the sales volume decreales by 100 units, what would be the net operating income? $ 3,000 Net operating income
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