MANAGERIAL ACCT.F/MANAGERS>CUSTOM<
4th Edition
ISBN: 9781307090147
Author: Noreen
Publisher: MCG/CREATE
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Question
Chapter 12A, Problem 12A.5P
1.
To determine
Division will accept or reject the price of $340 if idle capacity is of 1,000-unit order.
Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.
2.
To determine
Financial advantage for the company if Q Divisions rejects the price of $340
Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.
3.
To determine
Financial advantage for the company if Q Divisions accepts the price of $340
Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.
4.
To determine
Conclusions drawn after the use of market price as transfer price in intra-company transactions.
Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.
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hw6 q9
Federated Manufacturing Incorporated (FMI) produces electronic components in three divisions: industrial, commercial, and consumer products. The commercial products division annually purchases 10,600 units of part 23–6711, which the industrial division produces for use in manufacturing one of its own products. The commercial division is growing rapidly; it is expanding its production and now wants to increase its purchases of part 23–6711 to 15,600 units per year. The problem is that the industrial division is at full capacity. No new investment in the industrial division has been made for some years because top management sees little future growth in its products, so its capacity is unlikely to increase soon.
The commercial division can buy part 23–6711 from Advanced Micro Incorporated or from Admiral Electric, a customer of the industrial division now purchasing 680 units of part 88–461. The industrial division's sales to Admiral would not be affected by the commercial…
Ma1.
7) Bluebird Manufacturing has received a special one-time order for 16,600 bird feeders at $4.60 per unit. Bluebird currently produces and sells 75,000 units at $8.60 each. This level represents 80% of its capacity. Production costs for these units are $5.10 per unit, which includes $3.85 of variable costs and $2.85 of fixed costs. If the special offer is accepted, there will be no incremental fixed cost. If Bluebird accepts this additional business, the effect on income will be:
Multiple Choice
$12,450 increase.
$8,300 decrease.
$76,360 increase.
$63,910 increase.
$63,910 decrease.
Question A9
A company is using a relevant costing approach in producing a price for a tender for a one-off contract.
The contract needs 15kg of material Y. It currently costs £100 per kg to purchase material Y.
The company has 10kg of this material in stock from a previous contract, it cost £85 per kg when purchased two years ago and it will not be used in the ordinary course of business.
If it is not used for this contract the company has found a buyer for the quantity of material Y held, they are willing to pay £90 per kg for the material although it will cost £50 to pack and ship the material to the buyer.
What is the relevant cost of material Y for the contract?
Chapter 12A Solutions
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