The Bat Division of World Baseball Berhad has just revised its actual cost data for 2020. Bat Division transfers goods to the Sport Division. Sport Division can buy the same goods in the open market for RM122 each. Bat's new cost data are as follows: Direct materials Direct labor RM 40 30 Variable overhead Fixed overhead Variable selling expenses Fixed selling and admini strative expenses Total costs 10 16 6. + 12 RM114 20 RM134 Desired retum Sales price + Current production is 200,000 units, and the Bat Division has a capacity of 300,000 units. Required: What is the lowest price the Bat Division should charge for the intemal transfers of its goods? b. a. What is the highest price the Sport Division should pay for the units? Give the primary reason why the Bat Division should reduce its price. с.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The Bat Division of World Baseball Berhad has just revised its actual cost data for 2020. Bat
Division transfers goods to the Sport Division. Sport Division can buy the same goods in the
open market for RM122 each. Bat's new cost data are as follows:
Direct materials
Direct labor
RM 40
30
Variable overhead
Fixed overhead
Variable selling expenses
Fixed selling and admini strative expenses
Total costs
10
16
6.
+
12
RM114
20
RM134
Desired retum
Sales price
+
Current production is 200,000 units, and the Bat Division has a capacity of 300,000 units.
Required:
What is the lowest price the Bat Division should charge for the intemal transfers of its
goods?
b.
a.
What is the highest price the Sport Division should pay for the units?
Give the primary reason why the Bat Division should reduce its price.
с.
Transcribed Image Text:The Bat Division of World Baseball Berhad has just revised its actual cost data for 2020. Bat Division transfers goods to the Sport Division. Sport Division can buy the same goods in the open market for RM122 each. Bat's new cost data are as follows: Direct materials Direct labor RM 40 30 Variable overhead Fixed overhead Variable selling expenses Fixed selling and admini strative expenses Total costs 10 16 6. + 12 RM114 20 RM134 Desired retum Sales price + Current production is 200,000 units, and the Bat Division has a capacity of 300,000 units. Required: What is the lowest price the Bat Division should charge for the intemal transfers of its goods? b. a. What is the highest price the Sport Division should pay for the units? Give the primary reason why the Bat Division should reduce its price. с.
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