Frocks and Gowns, Incorporated, has two divisions, Day Wear and Night Wear. The Day Wear Division has an investment base of $880,000 andproduces and sells 119,000 units of Collars at a market price of $12.20 per unit. Variable costs for the Collars total $6.80 per unit, and fixed charges are$3.80 per unit (based on a capacity of 139,000 units). The Night Wear Division wants to purchase 27,000 units of Collars from the Day Wear Division.However, the Night Wear Division is only willing to pay $8.00 per unit.What is the contribution margin for the Day Wear Division without the transfer to the Night Wear Division?

Solution:- Given, Investment = $8,80,000 Units produced = $1,19,000 Market Price = $12.20 per unit…

Answered: What is the contribution margin for the…

Business

Accounting

What is the contribution margin for the Day Wear Division without the transfer to the Night Wear 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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Question

Frocks and Gowns, Incorporated, has two divisions, Day Wear and Night Wear. The Day Wear Division has an investment base of $880,000 and
produces and sells 119,000 units of Collars at a market price of $12.20 per unit. Variable costs for the Collars total $6.80 per unit, and fixed charges are
$3.80 per unit (based on a capacity of 139,000 units). The Night Wear Division wants to purchase 27,000 units of Collars from the Day Wear Division.
However, the Night Wear Division is only willing to pay $8.00 per unit.
What is the contribution margin for the Day Wear Division without the transfer to the Night Wear Division?

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