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Easy Fit Ltd. manufactures heating, ventilation, and air conditioning (HVAC) equipment. The Manufacturing Division creates parts; and, the Assembly Division builds and sells the equipment. The Manufacturing Division "sells" fumace parts packages to the Assembly Division. The market price for the Assembly Division to purchase a mini furnace is $3,500. The fixed costs for the Manufacturing Division are assumed to be the same over the range of 2,000-5,000 units. The fixed costs for the Assembly Division are assumed to be $40.00 per unit at 5,000 units. Manufacturing costs per furnace are. $1,300.00 $350.00 $100.00 $90.00 Direct materials Direct labour Variable overhead Division fixed costs Assembly's costs per completed furnace are. $25.00 $150.00 $50.00 $40.00 Direct materials Direct labour Variable overhead Division fixed costs If the Assembly Division sells 1,000 furnaces at a price of $3,500 per unit to customers, what is the company's operating income? $1,660,000 $3,250,000 $175,000 $3,235,000 $1,395,000

Easy Fit Ltd. manufactures heating, ventilation, and air conditioning (HVAC) equipment. The Manufacturing Division creates parts; and, the Assembly Division builds and sells the equipment. The Manufacturing Division "sells" fumace parts packages to the Assembly Division. The market price for the Assembly Division to purchase a mini furnace is $3,500. The fixed costs for the Manufacturing Division are assumed to be the same over the range of 2,000-5,000 units. The fixed costs for the Assembly Division are assumed to be $40.00 per unit at 5,000 units. Manufacturing costs per furnace are. $1,300.00 $350.00 $100.00 $90.00 Direct materials Direct labour Variable overhead Division fixed costs Assembly's costs per completed furnace are. $25.00 $150.00 $50.00 $40.00 Direct materials Direct labour Variable overhead Division fixed costs If the Assembly Division sells 1,000 furnaces at a price of $3,500 per unit to customers, what is the company's operating income? $1,660,000 $3,250,000 $175,000 $3,235,000 $1,395,000

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
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Easy Fit Ltd. manufactures heating, ventilation, and air conditioning (HVAC) equipment. The Manufacturing Division creates parts; and, the Assembly Division builds and sells the equipment. The Manufacturing Division "sells" furnace parts packages to the Assembly Division. The market price for the Assembly Division to purchase a mini furnace is $3,500. The fixed costs for the Manufacturing Division are assumed to be the same over the range of 2,000-5,000 units. The fixed costs for the Assembly Division are assumed to be $40.00 per unit at 5,000 units. Manufacturing costs per furnace are: $1,300.00 $350.00 $100.00 Direct materials Direct labour Variable overhead Division fixed costs $90.00 Assembly's costs per completed furnace are: $25.00 $150.00 $50.00 $40.00 Direct materials Direct labour Variable overhead Division fixed costs If the Assembly Division sells 1,000 furnaces at a price of $3,500 per unit to customers, what is the company's operating income? $1,660,000 $3,250,000 $175,000 $3,235,000 $1,395,000
Transcribed Image Text:Easy Fit Ltd. manufactures heating, ventilation, and air conditioning (HVAC) equipment. The Manufacturing Division creates parts; and, the Assembly Division builds and sells the equipment. The Manufacturing Division "sells" furnace parts packages to the Assembly Division. The market price for the Assembly Division to purchase a mini furnace is $3,500. The fixed costs for the Manufacturing Division are assumed to be the same over the range of 2,000-5,000 units. The fixed costs for the Assembly Division are assumed to be $40.00 per unit at 5,000 units. Manufacturing costs per furnace are: $1,300.00 $350.00 $100.00 Direct materials Direct labour Variable overhead Division fixed costs $90.00 Assembly's costs per completed furnace are: $25.00 $150.00 $50.00 $40.00 Direct materials Direct labour Variable overhead Division fixed costs If the Assembly Division sells 1,000 furnaces at a price of $3,500 per unit to customers, what is the company's operating income? $1,660,000 $3,250,000 $175,000 $3,235,000 $1,395,000
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