Word Grouper is a publishing company with a number of different book lines. Each line has contracts with a number of different authors. The company also owns a printing operation called Quick Press. The book lines and the printing operation each operate as a separate profit center. The printing operation earns revenue by printing books by authors under contract with the book lines owned by Word Grouper, as well as authors under contract with other companies. The printing operation bills out at $0.01 per page, and a typical book requires 440 pages of print. A manager from Business Books, one of Word Grouper's book lines, has approached the manager of the printing operation offering to pay $0.007 per page for 1,500 copies of a 440-page book. The book line pays outside printers $0.008 per page. The printing operation's variable cost per page is $0.003. Determine whether the printing should be done internally or externally, and the appropriate transfer price, under each of the following situations.

Word Grouper is a publishing company with a number of different book lines. Each line has contracts with a number of different authors. The company also owns a printing operation called Quick Press. The book lines and the printing operation each operate as a separate profit center. The printing operation earns revenue by printing books by authors under contract with the book lines owned by Word Grouper, as well as authors under contract with other companies. The printing operation bills out at $0.01 per page, and a typical book requires 440 pages of print. A manager from Business Books, one of Word Grouper's book lines, has approached the manager of the printing operation offering to pay $0.007 per page for 1,500 copies of a 440-page book. The book line pays outside printers $0.008 per page. The printing operation's variable cost per page is $0.003. Determine whether the printing should be done internally or externally, and the appropriate transfer price, under each of the following situations.

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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