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Division A makes a part that is sells to customers outside of the company. Data concerning this appear as follows: Sales (400,000 units) P800,000 Direct material 0.25 Direct labor 0.25 Variable Overhead 0.10 Variable Selling &Admin 0. 20 Fixed overhead 0.10 Fixed selling &admin 0.05 Division B purchases a similar part to outside suppliers for P2 and it requires 50,000 units of the part. If division B purchase the part to division A how much is the transfer price given the following situation: a. What is the maximum transfer price? b. What is the minimum transfer price if Division A has excess capacity? c. What is the minimum transfer price if Division A has no excess capacity? d. What is the minimum transfer price if 360,000 units were sold to outside customers?

Division A makes a part that is sells to customers outside of the company. Data concerning this appear as follows: Sales (400,000 units) P800,000 Direct material 0.25 Direct labor 0.25 Variable Overhead 0.10 Variable Selling &Admin 0. 20 Fixed overhead 0.10 Fixed selling &admin 0.05 Division B purchases a similar part to outside suppliers for P2 and it requires 50,000 units of the part. If division B purchase the part to division A how much is the transfer price given the following situation: a. What is the maximum transfer price? b. What is the minimum transfer price if Division A has excess capacity? c. What is the minimum transfer price if Division A has no excess capacity? d. What is the minimum transfer price if 360,000 units were sold to outside customers?

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter3: Process Cost Systems
Section: Chapter Questions
Problem 4CMA: A company is using process costing with the first-in, first-out (FIFO) method, and all costs are...
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1. Division A makes a part that is sells to customers outside of the company. Data concerning this appear as follows: Sales (400,000 units) P800,000 Direct material 0.25 Direct labor 0.25 Variable Overhead 0.10 Variable Selling &Admin 0. 20 Fixed overhead 0.10 Fixed selling &admin 0.05 Division B purchases a similar part to outside suppliers for P2 and it requires 50,000 units of the part. If division B purchase the part to division A how much is the transfer price given the following situation: a. What is the maximum transfer price? b. What is the minimum transfer price if Division A has excess capacity? c. What is the minimum transfer price if Division A has no excess capacity? d. What is the minimum transfer price if 360,000 units were sold to outside customers?
Transcribed Image Text:1. Division A makes a part that is sells to customers outside of the company. Data concerning this appear as follows: Sales (400,000 units) P800,000 Direct material 0.25 Direct labor 0.25 Variable Overhead 0.10 Variable Selling &Admin 0. 20 Fixed overhead 0.10 Fixed selling &admin 0.05 Division B purchases a similar part to outside suppliers for P2 and it requires 50,000 units of the part. If division B purchase the part to division A how much is the transfer price given the following situation: a. What is the maximum transfer price? b. What is the minimum transfer price if Division A has excess capacity? c. What is the minimum transfer price if Division A has no excess capacity? d. What is the minimum transfer price if 360,000 units were sold to outside customers?
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