Solve the following:A company recently established a branch to sell its most popular fan. The company purchases these fans and stores them in a warehouse. The fans are then shipped from the warehouse to both the home office and the new branch, FOB destination. Home office management is responsible for setting the transfer price of the fans charged to the branch in a manner that will measure the long-run incremental cost of supplying the fans to the branch on a continuing basis. Per unit costs for the fans areP50.00 purchase priceP2.50 shipping cost to warehouseP3.00 handling cost including P1.00 of allocated administrative overheadP3.50 shipping cost to branch paid by home officeP1.25 shipping cost to home office The minimum transfer price that home office should charge the branch to meet its measurement objective is?

Accounting - In order to make financial data plain and understandable for all stakeholders and…

Answered: y established a branch to sell its most…

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Solve the following:

A company recently established a branch to sell its most popular fan. The company purchases these fans and stores them in a warehouse. The fans are then shipped from the warehouse to both the home office and the new branch, FOB destination. Home office management is responsible for setting the transfer price of the fans charged to the branch in a manner that will measure the long-run incremental cost of supplying the fans to the branch on a continuing basis. Per unit costs for the fans are

P50.00 purchase price

P2.50 shipping cost to warehouse

P3.00 handling cost including P1.00 of allocated administrative overhead

P3.50 shipping cost to branch paid by home office

P1.25 shipping cost to home office

The minimum transfer price that home office should charge the branch to meet its measurement objective is?

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