Part 43X costs the Southern Division of Norris Corporation $26 to produce. Making up that cost are direct materials of $10. direct labor of $4, variable manufacturing overhead of $9, and fixed manufacturing overhead of $3, Southern Division sells Part 43X to other companies for $30. The Northern Division of Norris Corporation can use Part 43X in one of its products. The Southern Division has enough idle capacity to produce all of the units of Part 43X that the Northern Division would require. What is the lowest transfer price at which the Southern Division should be willing to selI Part 43X to the Northern Division? Select one: a. 30 b. 23 C. 26 O d. 27
Q: Explain whether both managers are justified in their arguments. How can the Components Division…
A: Transfer price is the price for goods and services, at which these are transferred between different…
Q: what is the incremental effect on the company’s net income?
A:
Q: Magenta Company has a Components Division which currently manufactures 120,000 units of Part AAM but…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
Q: Sage Corporation manufactures two products with the following characteristics. Unit Contribution…
A: Where any resources are available in scarcity for production of a particular product, it should be…
Q: Company XYZ is currently producing and selling 100 units. At this level, the total direct materials…
A: “Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: Supler Corporation produces a part used in the manufacture of one of its products. The unit product…
A: Financial Advantage :— If benefits from the alternative plan is more than the current plan then…
Q: Supler Corporation produces a part used in the manufacture of one of its products. The unit product…
A: Relevant unit product costs = Direct material + direct labor + variable manufacturing overhead +…
Q: Company XYZ is currently producing and selling 100 units. At this level, the total direct materials…
A: Incremental cost = Incremental units×Variable cost per unit
Q: The Fabrication Division’s full (absorption) cost of a component is $340, which includes $40 of…
A: Particulars Amount Sales revenue $ 465 Less: Transfer price per component $ 374 Less: Variable…
Q: This year Burchard Company sold 40,000 units of its only product for $25 per unit. Manufacturing and…
A:
Q: The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division.…
A: Net income is the income earned by the company. It is presented in the income statement of the…
Q: NUBD Co. has only 25,000 hours of machine time each month to manufacture its two products. Product X…
A: In the given question, the number of machine hours is limited and is absence of any information, it…
Q: Company XYZ is currently producing and selling 100 units. At this level, the total direct materials…
A: Total variable cost = direct material + direct labor + variable MOH + Variable selling costs…
Q: Fiori Corporation's relevant range of activity is 4,000 units to 7,500 units. When it produces and…
A: Manufacturing costs means all costs that is incurred for the manufacture of products and services.
Q: Ford Company manufactures a part for its production cycle. The costs per unit for 10,000 units of…
A: Formula: Willing to pay for the part = Total cost - Fixed factory overhead.
Q: Cruise Company produces a part that is used in the manufacture of one of its products. The unit…
A: SOLUTION- Manufacturing cost is the sum of costs of all resources consumed in the process of making…
Q: Gelb Company currently manufactures 40,000 units per year of a key component for its manufacturing…
A: The decision to manufacture or buy needs to be taken on the basis of impact of cost changes arising…
Q: Piels Corporation produces a part that is used in the manufacture of one of its products. The costs…
A: Given the following information: Production units: 10,000 units Cost associated with the production…
Q: Red Company produces 1,000 units of a necessary component with the following costs: Direct Materials…
A: Maximum external price = Relevant manufacturing costs Relevant manufacturing costs = Direct…
Q: A company has already incurred $5,000 of costs in producing 6,000 units of Product XY. Product XY…
A: Given: Current selling price = $15 Further processing cost = $8 Selling price after further…
Q: Gelb Company currently manufactures 46,500 units per year of a key component for its manufacturing…
A: Formula: Total Variable cost = Variable cost per unit x number of units Number of units to be…
Q: Green Company produces 1,000 parts per year, which are used in the assembly of one of its products.…
A: A make-or-buy choice is a demonstration of picking between assembling an item in-house or buying it…
Q: Green Company produces 1,000 parts per year, which are used in the assembly of one of its products.…
A: Make or buy is one of an important and crucial decision need to taken by manager, in this decision…
Q: Dake Corporation's relevant range of activity is 2,200 units to 5,000 units. When it produces and…
A: SOLUTION- Indirect manufacturing costs are production costs that cannot be directly associated with…
Q: Lincoln Company produces a part that is used in the manufacture of one of its productsThe unit…
A: Given, Cost per unit to produce 5000 units: Direct materials $3 Direct labor (variable cost) 5…
Q: Edidas Company needs 20,000 units of Part GX to use in producing one of its products. If Edidas buys…
A: Relevant Costs are the equal to the marginal cost of production, i.e. the additional expenditure…
Q: Company XYZ is currently producing and selling 100 units. At this level, the total direct materials…
A: Total variable cost = direct material + direct labor + variable MOH + Variable selling costs…
Q: Easy Fit Ltd. manufactures heating, ventilation, and air conditioning (HVAC) equipment. The…
A: Operating income is the income or money earned by an entity after deducting the outlays incurred in…
Q: repare an incremental analysis showing whether the company should make or buy the switches. (Enter…
A: calculation for additional cost incurred are as follows:
Q: Carver Company manufactures a component used in the production of one of its main products. The…
A: Fixed overheads are the overheads which are incurred for an accounting period that, within certain…
Q: ABC Company has been maaufacturing its own products. The company is currently operating at 100% of…
A: The decision to make or buy the products depends on the expenses made from the two of the decisions.
Q: The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division.…
A: Transfer pricing methodology is used for setting prices at which products can be transferred from…
Q: Company XYZ is currently producing and selling 100 units. At this level, the total direct materials…
A: Incremental Cost:-It is an increased difference producing two different types of units, like the…
Q: Harmony is currently producing 100 units of a necessary component part by incurring P60,000 in…
A: Saving realize in buying instead of making the component = Relevant production costs - Buying costs…
Q: materials used by the Multinomah Division of Isbister Company are currently purchased from outside…
A: Pembroke Division:::: (Transfer price --Variable Cost)*Units transferred ($85-60$)*69000…
Q: Company XYZ is currently producing and selling 100 units. At this level, the total direct materials…
A: Incremental Cost per unit = Sum of Variable Cost / Units produced Incremental Cost of additional…
Q: Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent: Direct…
A: Net income: The bottom line of income statement which is the result of excess of earnings from…
Q: Cotton Corp. currently makes 12,500 subcomponents a year in one of its factories. The unit costs to…
A: Formulas:
Q: Payne Ltd manufactures three products, all of which use the same machine. Only 50,000 machine hours…
A:
Q: Goldberg Company currently manufactures 52,000 units per year of a key component for its…
A: Introduction Incremental cost: Incremental cost is the additional cost incurred by the company if it…
Q: Ancinas Company produces printers and uses a standard part in the manufacture of several of its…
A: Total purchase cost = No. of parts x Purchase cost per part from outside supplier = 43000 x $5.00…
Q: Company XYZ is currently producing and selling 100 units. At this level, the total direct materials…
A: Increase in units=102-100=2 units
Q: ABC Company makes 50,000 units per vear of a part it uses in the products it manufactures. The unit…
A: >Relevant cost for a decision is that cost that has a feature that makes it ‘relevant’ for the…
Q: Alcatraz Division of XYZ Corp. sells 80,000 units of part X to the outside market. Part X sells for…
A: In the given question, Alcatraz division is selling 10,000 units to Capone division at $ 40 per…
Q: Tom's Toolery is operating at 70% of its productive capacity. It is currently paying $23 per unit…
A: Relevant cost per unit of making = unit-level production costs…
Q: Edidas Company needs 20,000 units of Part GX to use in producing one of its products. If Edidas buys…
A: Variable cost means the cost which vary with the level of output where as fixed cost remain fixed…
Q: Phelps Industries is a multi-product company that currently manufactures 30,000 units of part ST35…
A: Differential analysis helps manager to evaluate costs and revenue that can arise from taking up…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
- Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of 1,350 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of 900 per unit. a. If a transfer price of 1,000 per unit is established and 75,000 units of materials are transferred, with no reduction in the Components Divisions current sales, how much would Ziegler Inc.s total operating income increase? b. How much would the Instrument Divisions operating income increase? c. How much would the Components Divisions operating income increase?Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins of 300 and 600, respectively. Assume initially that Patz can sell all that is produced of either component. Part A requires two hours of assembly, and B requires five hours of assembly. The firm has 300 assembly hours per week. Required: 1. Express the objective of maximizing the total contribution margin subject to the assembly-hour constraint. 2. Identify the optimal amount that should be produced of each machine part and the total contribution margin associated with this mix. 3. What if market conditions are such that Patz can sell at most 75 units of Part A and 60 units of Part B? Express the objective function with its associated constraints for this case and identify the optimal mix and its associated total contribution margin.Please show work: The Heating Division of Pronghorn International produces a heating element that it sells to its customers for $46 per unit. Its unit variable cost is $26, and its unit fixed cost is $6. Top management of Pronghorn International would like the Heating Division to transfer 14,600 heating units to another division within the company at a price of $27. Assume that the Heating Division has sufficient excess capacity to provide the 14,600 heating units to the other division. What is the minimum transfer price that the Heating Division should accept? Minimum transfer price $
- Wattle Limited has two divisions: Industry and Consumer. The Industry Division transfers partially completed components to the Consumer Division at a predetermined transfer price. The Industry Division’s standard variable production cost per unit is $500. This division could sell all its components to outside buyers at $650 per unit in a perfectly competitive market. The Consumer Division has a special offer of $740 for its product. The Consumer Division incurs variable costs of $260 in addition to the transfer price for the Industry Division’s components. Both Industry and Consumer divisions currently have spare production capacity. Required: a) Determine a transfer price using the general transfer pricing rule. ) b) Assume that the transfer price has been set at $530, is the Consumer Division manager likely to want to accept or reject the special offer? Why? c) Is the decision in the best interests of Wattle Limited as a whole? Explain.Campbell Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,200 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs $ 6,900 6,400 4,100 9,600 26,600 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Campbell for $2.80 each. Required a. Calculate the total relevant cost. Should Campbell continue to make the containers? b. Campbell could lease the space it currently uses in the manufacturing process. If leasing would produce $12,800 per month, calculate the total avoidable costs. Should Campbell continue to make the containers? a. Total relevant cost Should Campbell continue to make the containers? b. Total avoidable cost Should Campbell continue to make the containers?Washington Company has two divisions, Jefferson and Adams. Jefferson produces an item that Adams could use in its production. Adams currently is purchasing 100,000 units from an outside supplier for $78.40 per unit. Jefferson is currently operating at full capacity of 900,000 units and has variable costs of $46.40 per unit. The full cost to manufacture the unit is $59.20. Jefferson currently sells 900,000 units at a selling price of $86.40 per unit. Required: 1. What will be the effect on Washington Company's operating profit if the transfer is made internally? 2. What will be the change in profits for Jefferson if the transfer price is $67.20 per unit? 3. What will be the change in profits for Adams if the transfer price is $67.20 per unit?
- Vernon Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs $5,700 6,500 3,200 8,400 27,100 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Vernon for $2.60 each. Required a. Calculate the total relevant cost. Should Vernon continue to make the containers? b. Vernon could lease the space it currently uses in the manufacturing process. If leasing would produce $12,700 per month, calculate the total avoidable costs. Should Vernon continue to make the containers? a. Total relevant cost a. Should Vernon continue to make the containers? b. Total avoidable cost b. Should Vernon continue to make the containers?Avery Company has two divisions, Polk and Bishop. Polk produces an item that Bishop could use in its production. Bishop currently is purchasing 26,000 units from an outside supplier for $16 per unit. Polk is currently operating at less than its fll capacity of 580,000 units and has variable costs of $8 per unit. The full cost to manufacture the unit is $11. Polk currently sells 460,000 units at a selling price of $19 per unit. a. What will be the effect on Avery Company's operating profit if the transfer is made internally? b. What is the minimum transfer price from Polk's perspective? Minimum Transfer PriceSuper Corporation produces a part used in the manufacture of one of its products. The unit product cost is $21, computed as follows: Direct materials $ 6 Direct labor 8 Variable manufacturing overhead 2 Fixed manufacturing overhead 5 Unit product cost $ 21 An outside supplier has offered to provide the annual requirement of 6,500 of the parts for only $13 each. The company estimates that 80% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be: Question 15Answer a. $7 per unit on
- Rooney Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* $ 5,200 6,500 3,600 9,300 26,600 Allocated facility-level costs *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Rooney for $2.70 each. Required a. Calculate the total relevant cost. Should Rooney continue to make the containers? b. Rooney could lease the space it currently uses in the manufacturing process. If leasing would produce $11,500 per month, calculate the total avoidable costs. Should Rooney continue to make the containers? a. Total relevant cost Should Rooney continue to make the containers? b. Total avoidable cost Should Rooney continue to make the containers?Ahrends Corporation makes 43,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 12.80 23.30 2.10 26.50 $ 64.70 An outside supplier has offered to sell the company all of these parts it needs for $51.00 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $301,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $23.40 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.…Jordan Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs Allocated facility-level costs $ 5,700 6,800 3,900 8,100 27,200 One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Jordan for $2.90 each. Required a. Calculate the total relevant cost. Should Jordan continue to make the containers? b. Jordan could lease the space it currently uses in the manufacturing process. If leasing would produce $12.300 per rhonth, calculate the total avoidable costs. Should Jordan continue to make the containers? a. Total relevant cost Should Jordan continue to make the containers? b. Total avoidable cost Should Jordan continue to make the containers?