Required informationSB (Static) Truball Incorporated which manufactures sports....[The following information applies to the questions displayed below]Truball Incorporated which manufactures sports equipment, consists of several operating divisions. Division A has decidedto go outside the company to buy materials because division B plans to increase its selling price for the same materials to$200. Information for division A and division B follows:Outside price for materialsDivision A's annual purchasesDivision B's variable costs per unitDivision B's fixed costs, per yearDivision It's capacity utilization$15010,000$140$1,250,000Net benefit to the firm as a whole from buying outside100%unitsExercise 19-33 (Static) Transfer Pricing; Decision Making [LO 19-4]Required:1-0. Assume that division B can sell 10,000 units outside the company for $215 per unit with variable marketing costs of $10. What willbe the net benefit/cost to the firm as a whole if Division B sells outside? (Enter all the amounts as positive value.)

Need to Assess the performance of each division based on the actual costs incurred and the…

Answered: Required information SB (Static)…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 5E: Identify fixed and variable costs Intuit Inc. (INTU) develops and sells software products for the...

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! Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] Hudson Company reports the following contribution margin income statement. Sales (9,700 units at $280 each) Variable costs (9,700 units at $210 each) Contribution margin Fixed costs Income HUDSON COMPANY Contribution Margin Income Statement For Year Ended December 31 Exercise 18-19 (Algo) Evaluating strategies-new machine LO C2 The company is considering buying a new machine that will increase its fixed costs by $41,000 per year and decrease its variable costs by $10 per unit. Prepare a contribution margin income statement for the next year assuming the company purchases this machine. HUDSON COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales Variable costs Contribution margin Fixed costs Income/Loss $ 2,716,000 2,037,000 679,000 441,000 $ 238,000
Required information [The following information applies to the questions displayed below.] Henna Company produces and sells two products, Carvings and Mementos. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 53,000 units of each product. Income statements for each product follow. Sales Variable costs Contribution margin Fixed costs Income 3. Assume that the company expects sales of each product to increase to 67,000 units next year with no change in unit selling price. Prepare a contribution margin income statement for the next year (as shown above with columns for each of the two products). (Round "per unit" answers to 2 decimal places.) Sales Variable cost Contribution margin Fixed costs Income (loss) Mementos $ 863,900 Carvings $ 863,900 604,730 259, 170 116,170 86,390 777,510 634,510 $ 143,000 $ 143,000 HENNA COMPANY Contribution Margin Income Statement Carvings Units 67,000…
Transfer Pricing from the Viewpoint of the Entire Company Division A manufactures electronic circuit boards. The boards can be sold either to Division B of the same company or to outside customers. Last year, the following activity occurred in Division A: Sales to Division B were at the same price as sales to outside customers. The circuit boards purchased by Division B were used in an electronic instrument manufactured by that division (one board per instrument). Division B incurred $100 in additional variable cost per instrument and then sold the instruments for $300 each. Required: 1. Prepare income statements for Division A, Division B, and the company as a whole. 2. Assume Division A’s manufacturing capacity is 20,000 circuit boards. Next year, Division B wants to purchase 5,000 circuit boards from Division A rather than 4,000. (Circuit boards of this type are not available from outside sources.) From the standpoint of the company as a whole, should Division A sell the 1,000…
ABC and CVP Analysis: Multiple Products Good Scent, Inc., produces two colognes: Rose and Violet. Of the two, Rose is more popular. Data concerning the two products follow: Expected sales (in cases) Selling price per case Direct labor hours. Machine hours Receiving orders Packing orders Direct labor benefits. Machine costs Receiving department Machine costs Receiving department Packing department Total costs *All depreciation Break-even cases of Rose Fixed $ Break-even cases of Violet Break-even cases of Rose Material cost per case Direct labor cost per case The company uses a conventional costing system and assigns overhead costs to products using direct labor hours. Annual overhea costs follow. They are classified as fixed or variable with respect to direct labor hours. Rose 242,000 135,500 Break-even cases of Violet 58,000 11,600 $103 33,650 9,400 214,500 242,000 52 99 $53 Violet $12 5,750 $81 2,750 $592,000 $394,000 214,500* 193,060 27 49 $40 Variable $8 $200,940 Required: 1. Using…
Zumsteg Products, Incorporated, has a Pump Division that manufactures and sells a number of products, including a standard pump. Date concerning that pump appear below: Capacity in units Selling price to outside customers Variable cost per unit Fixed cost per unit (based on capacity) 72,800 #106 70.0 $20 The company has a Pool Products Division that could use this pump in one of its products. The Pool Products Division is currently purchasing 8,800 of these pumps per year from an overseas supplier at a cost of $99 per pump. Required: Assume that the Pump Division has enough Idle capacity to handle all of the Pool Products Division's needs. What is the acceptable ange, If any, for the transfer price between the two divisions? Note: Round your answers to 1 decimal place.
Classify costsSeymour Clothing Co. manufactures a variety of clothing types fordistribution to several major retail chains. The following costs areincurred in the production and sale of blue jeans: a. Shipping boxes used to ship ordersb. Consulting fee of $200,000 paid to industry specialist for marketingadvicec. Straight-line depreciation on sewing machines d. Salesperson's salary, $10,000 plus 2% of the total salese. Fabricf. Dye g. Threadh. Salary of designersi. Brass buttons j. Legal fees paid to attorneys in defense of the company in a patentinfringement suit.$50,000 plus 587 per hour k. Insurance premiums on property, plant, and equipment, $70,000 peryear plus $5 per 530,000 of insured value over $8,000,0001. Rental costs of warehouse, $5,000 per month plus $4 per square foot ostorage used m. Suppliesn. Leather for patches identifying the brand on individual pieces ofapparelo. Rent on plant equipment, $50,000 per year p. Salary of production vice presidentq. Janitorial services,…
DIFFERENTIAL ANALYSIS AND DECISION MAKING Heavy Metals produces various electronics items for use in heavy machines. The company usually produces all the necessary parts for its products. However, an outside supplier has recently offered to sell a specialized part – Part H – to the company for $31 per unit. To evaluate this offer, the company has gathered the following information regarding its own cost of producing the Part H internally: Per unit 15,000 units per year Direct materials 12 180,000 Direct Labour 12 180,000 Variable manufacturing overhead 3 45,000 Fixed manufacturing overhead (one-third belongs to supervisory salaries; two-thirds belongs to the depreciation of special equipment) 6 90,000 Required (show your calculation): i) Assuming that the company has no alternative use for the facilities now…
Determining transfer pricing The Watkins Company is decentralized, and divisions are considered investment centers. Watkins specializes in sports equipment, and one division manufactures netting that is used for basketball hoops, soccer goals, and other sports equipment. The Netting Division reports the following information for a heavy-duty basketball hoop net: The Basketball Equipment Division can purchase a similar heavy-duty net from an outside vendor for $15. Requirements 1. Determine the negotiable range for the transfer price. 2. What is the minimum transfer price the Netting Division should consider if operating at capacity? Below capacity? 3. What is the maximum transfer price the Basketball Equipment Division should consider?
Alba Company is considering the introduction of a new product. To determine the selling price of this product, you have gathered the following information: • Direct material cost per unit Direct labor cost per unit • Variable manufacturing cost per unit Total fixed manufacturing costs.. • Variable selling and administration cost per unit Total fixed selling and administration costs.. .$3,000 .$2,250 ..S1,000 .S1,750,000 ..$1,250 .$550,000 If the company requires a rate of return 18% on its investments and $6,000,000 investments are needed. The total direct materials to be used in the production is $3,000,000. Required: 1. If the company uses absorption costing approach to cost-plus pricing, compute: a. The unit product cost. b. The markup percentage. c. The selling price per unit. 2. Assume that the company is considering the introduction of other new product. If the target-selling price per unit is $5,500 and the company investing $5,000,000 to purchase equipment needed produce 500…
alshetem 2. A company is analyzing a make-versus-purchase situation for a component used in several products, and the engineering department has developed these data: ion A: Purchase 10,000 items per year at a fixed price of $8.50 per item. The cost of placing the order is negligible according to the present cost accounting procedure. ion B: Manufacture 10,000 items per year, using available capacity in the factory. Cost estimates are direct materials $5.00 per item and direct labor = $1.50 per item. Manufacturing overhead is $3.00 per item. Based on these data, should the item be purchased or manufactured? poge buopoa eotoriq 1elted not qge a bsolqu 10 (80lorig ni
An investment banker is analyzing two companies that specialize in the production and sale of candied yams. Sheridan Yams uses a labor-intensive approach, and Sunland Yams uses a mechanized system. CVP income statements for the two companies are shown below. Sales Variable costs Contribution margin Fixed costs Net income Sheridan Yams $394,000 310,000 84,000 34,000 $50,000 Sunland Yams $394,000 156,000 238,000 188,000 $50,000 The investment banker is interested in acquiring one of these companies. However, she is concerned about the impact that each company's cost structure might have on its profitability.
Division A of SLG Company produces a part it sells to other companies. Sales and cost data for the part are as follows: Capacity in units 60,000 units Selling price per unit O $27 per unit O $39 per unit O $36 per unit O $41 per unit Variable cost per unit O None of the above. Fixed cost per unit at capacity Division B, another division of SLG Company, would like to buy this part from Division A. Division B is currently purchasing the part from an outside source at $38 per unit. If Division A sells to Division B, then $1 in Division A's variable costs can be avoided. Assume Division A has enough idle capacity to handle all of Division B's needs without any increase in fixed costs and without interfering with outside sales. According to the transfer pricing guidelines, what is the lowest acceptable transfer price from the perspective of Division A? $40 per unit $28 per unit $9 per unit

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