Spirit Manufacturing is a division of Crane Communications, Inc. Spirit produces cell phones and sells these phones to other communication companies, as well as to Crane. Recently, the vice president of marketing for Crane approached Spirit with a request to make 25.200 units of a special cell phone that could be used anywhere in the world. The following information is available regarding the Spirit division: Selling price of regular cell phone Variable cost of regular cell phone $126 63 Additional variable cost of special cell phone 51 The marketing vice president offers to pay Spirit $232 per phone. Spirit has no available capacity and would have to forgo sales of 33,200 phones to existing customers to meet this request. Calculate the minimum transfer price.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Spirit Manufacturing is a division of Crane Communications, Inc. Spirit produces cell phones and sells these phones to other communication companies, as well as to Crane. Recently, the vice president of marketing for Crane approached Spirit with a request to make 25, 200 units
of a special cell phone that could be used anywhere in the world. The following information is available regarding the Spirit division: Selling price of regular cell phone Variable cost of regular cell phone $126 63 Additional variable cost of special cell phone 51 The marketing vice
president offers to pay Spirit $232 per phone. Spirit has no available capacity and would have to forgo sales of 33,200 phones to existing customers to meet this request. Calculate the minimum transfer price.
Transcribed Image Text:Spirit Manufacturing is a division of Crane Communications, Inc. Spirit produces cell phones and sells these phones to other communication companies, as well as to Crane. Recently, the vice president of marketing for Crane approached Spirit with a request to make 25, 200 units of a special cell phone that could be used anywhere in the world. The following information is available regarding the Spirit division: Selling price of regular cell phone Variable cost of regular cell phone $126 63 Additional variable cost of special cell phone 51 The marketing vice president offers to pay Spirit $232 per phone. Spirit has no available capacity and would have to forgo sales of 33,200 phones to existing customers to meet this request. Calculate the minimum transfer price.
Multiple Choice Question 119
The dollar amount of the controllable margin
O is always equal to the contribution margin.
cannot be a negative figure.
O is usually higher than the contribution margin.
is usually lower than the contribution margin.
Transcribed Image Text:Multiple Choice Question 119 The dollar amount of the controllable margin O is always equal to the contribution margin. cannot be a negative figure. O is usually higher than the contribution margin. is usually lower than the contribution margin.
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