The Dairy Division of Famous Foods, Inc. produces and sells milk to outside customers. The operation has the capacity to produce 150,000 gallons of milk a year. Last year's operating results were as follows: Sales (100,000 gallons) Variable Cost P 300,000 175,000 125,000 65,000 Contribution Margin Fixed Cost Net income 60,000 18. Assume the Yogurt Division wants to purchase 30,000 gallons of milk from the Dairy Division. The minimum transfer price that Dairy Division's is willing to accept 19. Assume the Dairy Division is operating at capacity. If the Yogurt Division wants to purchase 30,000 gallons of milk from the Dairy Division, what is the minimum price that will allow the Dairy Division to maintain its current net income? 20. Based on #19, if the transfer would take place, what will the effect on the profit of Dairy Division?

The Dairy Division of Famous Foods, Inc. produces and sells milk to outside customers. The operation has the capacity to produce 150,000 gallons of milk a year. Last year's operating results were as follows: Sales (100,000 gallons) Variable Cost P 300,000 175,000 125,000 65,000 Contribution Margin Fixed Cost Net income 60,000 18. Assume the Yogurt Division wants to purchase 30,000 gallons of milk from the Dairy Division. The minimum transfer price that Dairy Division's is willing to accept 19. Assume the Dairy Division is operating at capacity. If the Yogurt Division wants to purchase 30,000 gallons of milk from the Dairy Division, what is the minimum price that will allow the Dairy Division to maintain its current net income? 20. Based on #19, if the transfer would take place, what will the effect on the profit of Dairy Division?

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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