Fundamentals Of Cost Accounting (6th Edition)
6th Edition
ISBN: 9781259969478
Author: WILLIAM LANEN, Shannon Anderson, Michael Maher
Publisher: McGraw Hill Education
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Question
Chapter 1, Problem 41P
a.
To determine
Identify the unit cost which would be asked from the North Division to pay by the manager of the South Division.
b.
To determine
Identify the unit cost which would be argued from the North Division to be paid by the manager of the North Division.
c.
To determine
Explain the unit cost which should be recommended for a sale of units from the South Division to the North Division.
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Students have asked these similar questions
Durham Parts (DP) makes a variety of products. It is organized in two divisions, Eastern and Western. The managers for each division
are paid, in part, based on the financial performance of their divisions. The Western Division normally sells to outside customers but.
on occasion, also sells to the Eastern Division. When it does, corporate policy states that the price must be cost plus 25 percent to
ensure a "fair" return to the selling division. Western received an order from Eastern for 1,200 units. Western's planned output for the
year had been 4,800 units before Eastern's order. Western's capacity is 6,000 units per year. The costs for producing those 4,800
units follow
Materials
Direct labor
Other costs varying with output
Fixed costs (do not vary with output)
Totals
Total
$ 240,000
115,200
76,800
288,000
$ 720,000
Per Unit
$ 50
24
16
60
$ 150
Required:
a. If you are the manager of the Western Division, what unit cost would you ask the Eastern Division to pay?
b. If you are the…
Durham Parts (DP) makes a variety of products. It is organized in two divisions, Eastern and Western. The managers for each division
are paid, in part, based on the financial performance of their divisions. The Western Division normally sells to outside customers but,
on occasion, also sells to the Eastern Division. When It does, corporate policy states that the price must be cost plus 25 percent to
ensure a "fair" return to the selling division. Western received an order from Eastern for 1.200 units. Western's planned output for the
year had been 4,800 units before Eastern's order. Western's capacity is 6.000 units per year. The costs for producing those 4,800
units follow.
Materials
Direct labor
Other costs varying with output
Fixed costs (do not vary with output)
Totals
Total
$364,800
177,600
139,200
288,000
$ 969,600
Required:
a. If you are the manager of the Western Division, what unit cost would you ask the Eastern Division to pay?
b. If you are the manager of the Eastern…
Vaughn treats its divisions as profit centers and allows division managers to choose whether to sell or to
buy from internal division. Corporate policy requires that all interdivisional sales and purchases be
transferred at variable cost.
Gamma Division of Vaughn Corp. produces electric motors. This product is currently sold to outside
customers but is needed by Omega, another division of Vaughn. Gamma Division's estimated sales and
standard cost data for the year ended December 31, based on practical capacity of 60,000 units are as
follows:
P 7,200,000
3, 300,000
P 3,900,000
1,075,000
P 2,825,000
Sales
Less: Variables Cost
Contribution Margin
Fixed Cost
Operating Income
Gamma has an opportunity to sell 12,000 units to Omega. Omega can purchase the units it needs from
outside supplier for P92 each.
Required:
Assuming that Gamma can normally sell 57,000 units to outsider customers
1. compute for the minimum transfer price acceptable to Gamma.
2. Compute for the maximum transfer price.
Chapter 1 Solutions
Fundamentals Of Cost Accounting (6th Edition)
Ch. 1 - Explain why it is important to consider the...Ch. 1 - Explain the differences between financial...Ch. 1 - Place the letter of the appropriate accounting...Ch. 1 - Distinguish among the value chain, the supply...Ch. 1 - Who are the customers of cost accounting?Ch. 1 - How can cost accounting information together with...Ch. 1 - Prob. 7RQCh. 1 - Does the passage of Sarbanes-Oxley mean that codes...Ch. 1 - Prob. 9CADQCh. 1 - Prob. 10CADQ
Ch. 1 - Prob. 11CADQCh. 1 - Its not the job of accounting to determine...Ch. 1 - Prob. 13CADQCh. 1 - How would cost accounting information help...Ch. 1 - Airlines are well known for using complex pricing...Ch. 1 - Hostess Brands makes a variety of baked goods just...Ch. 1 - What potential conflicts might arise between...Ch. 1 - Refer to the Business Application discussion of...Ch. 1 - Prob. 19CADQCh. 1 - Why does a cost accountant need to be familiar...Ch. 1 - Will studying cost accounting increase the chances...Ch. 1 - Prob. 22CADQCh. 1 - Value Chain and Classification of Costs Apple...Ch. 1 - Pfizer Inc., a pharmaceutical firm, incurs many...Ch. 1 - Tesla, Inc., incurs many types of costs in its...Ch. 1 - Prob. 26ECh. 1 - Accounting Systems McDonalds is a major company in...Ch. 1 - Accounting Systems Ford Motor Company manufactures...Ch. 1 - Cost Data for Managerial Purposes As an analyst at...Ch. 1 - Prob. 30ECh. 1 - Prob. 31ECh. 1 - Refer to the information in Exercise 1-31. The...Ch. 1 - Refer to Exhibit 1.5, which shows budgeted versus...Ch. 1 - Trends in Cost Accounting Required For each cost...Ch. 1 - Prob. 35ECh. 1 - Prob. 36ECh. 1 - Refer to the information in Exercise 1-32. Jon...Ch. 1 - Prob. 38PCh. 1 - Cost Data for Managerial Purposes Imperial Devices...Ch. 1 - Cost Data for Managerial Purposes You have been...Ch. 1 - Prob. 41PCh. 1 - Cost Data for Managerial Purposes Campus Package...Ch. 1 - Cost Data for Managerial Purposes KC Services...Ch. 1 - Cost Data for Managerial Purposes B-You is a...Ch. 1 - Cost Data for Managerial Purposes Toms Tax...Ch. 1 - Gilman’s Café is a popular restaurant in a local...Ch. 1 - Prob. 47PCh. 1 - Prob. 48PCh. 1 - Refer to Exhibit 1.5, which shows budgeted versus...Ch. 1 - Cost Data for Managerial PurposesFinding Unknowns...Ch. 1 - Prob. 51PCh. 1 - Prob. 52PCh. 1 - Prob. 53ICCh. 1 - Miller Cereals is a small milling company that...Ch. 1 - Before Miller Cereals can introduce the new...Ch. 1 - The following story is true except that all names...
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