The Lumber Division of Vaughn Manufacturing produces and sells lumber that can be sold to outside customers or within the company to the Construction Division. The following data have been gathered for the coming period: Lumber Division: Capacity Selling price per board foot Variable production cost per bd. ft. Variable selling cost per bd.ft. Construction Division: Board feet needed Outside price paid per bd. ft. 200000 board feet $3.50 $1.20 $0.50 $3.15 $1.35 Ⓒ$4.00 $3.65 60000 $4 If the Lumber Division sells to the Construction Division, $0.35 per board foot can be saved in shipping costs. If current outside sales are 200000 board feet, what is the minimum transfer price that the Lumber Division should accept?

The Lumber Division of Vaughn Manufacturing produces and sells lumber that can be sold to outside customers or within the company to the Construction Division. The following data have been gathered for the coming period: Lumber Division: Capacity Selling price per board foot Variable production cost per bd. ft. Variable selling cost per bd.ft. Construction Division: Board feet needed Outside price paid per bd. ft. 200000 board feet $3.50 $1.20 $0.50 $3.15 $1.35 Ⓒ$4.00 $3.65 60000 $4 If the Lumber Division sells to the Construction Division, $0.35 per board foot can be saved in shipping costs. If current outside sales are 200000 board feet, what is the minimum transfer price that the Lumber Division should accept?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 1PA: The following product Costs are available for Haworth Company on the production of chairs: direct...

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