Use the following information for the next 3 questions (3, 4 &5). Division X sells organic high-gluten flour to Division Y. Division X incurs costs of $0.4 per pound of flour. Division Y makes loaves of bread that sell for $2 each. Division Y incurs costs of $1.3 per loaf, excluding the cost of the flour. Eachloafofbreaduses0.25poundofflour. Transferpriceissetat$0.6/lb. 3. What is the operating income per pound of flour for Division X? 4. What is the operating income per loaf for Division Y? 5. What is the operating income per loaf for the entire organization?
Use the following information for the next 3 questions (3, 4 &5). Division X sells organic high-gluten flour to Division Y. Division X incurs costs of $0.4 per pound of flour. Division Y makes loaves of bread that sell for $2 each. Division Y incurs costs of $1.3 per loaf, excluding the cost of the flour. Eachloafofbreaduses0.25poundofflour. Transferpriceissetat$0.6/lb. 3. What is the operating income per pound of flour for Division X? 4. What is the operating income per loaf for Division Y? 5. What is the operating income per loaf for the entire organization?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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•Use the following information for the next 3 questions (3, 4 &5).
Division X sells organic high-gluten flour to Division Y. Division X incurs costs of $0.4 per pound of flour. Division Y makes loaves of bread that sell for $2 each. Division Y incurs costs of $1.3 per loaf, excluding the cost of the flour. Eachloafofbreaduses0.25poundofflour. Transferpriceissetat$0.6/lb.
3. What is the operating income per pound of flour for Division X?
4. What is the operating income per loaf for Division Y?
5. What is the operating income per loaf for the entire organization?
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