NUBD Co. operates a Component Division (CD) and Finished Product Division (FPD). CD's annual data is shown below: Sales - external market (40,000 units x P15) Variable costs Contribution margin Fixed costs Profit P600,000 400,000 P200,000 100,000 P100.000 The normal capacity of CD is 50,000 units. FPD needs 10,000 parts that CD can produce at the same variable cost per unit but will change FPD full absorption cost. FPD will process these parts at a cost of P10 per unit and would be sold to outside customers at P26. FPD's fixed costs are P30,000.
NUBD Co. operates a Component Division (CD) and Finished Product Division (FPD). CD's annual data is shown below: Sales - external market (40,000 units x P15) Variable costs Contribution margin Fixed costs Profit P600,000 400,000 P200,000 100,000 P100.000 The normal capacity of CD is 50,000 units. FPD needs 10,000 parts that CD can produce at the same variable cost per unit but will change FPD full absorption cost. FPD will process these parts at a cost of P10 per unit and would be sold to outside customers at P26. FPD's fixed costs are P30,000.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter7: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 58P: Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and...
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What would be the gross margin for FPD if it accepted the transfer price that will be charged by CD?
Transcribed Image Text:NUBD Co. operates a Component Division (CD) and Finished Product Division
(FPD). CD's annual data is shown below:
Sales - external market (40,000 units x P15)
Variable costs
Contribution margin
Fixed costs
Profit
P600,000
400,000
P200,000
100,000
P100.000
The normal capacity of CD is 50,000 units. FPD needs 10,000 parts that CD can
produce at the same variable cost per unit but will change FPD full absorption cost.
FPD will process these parts at a cost of P10 per unit and would be sold to outside
customers at P26. FPD's fixed costs are P30,000.
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