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1.
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.
To compute: The variable cost of Transport Service Department that is charged to each plant.
1.
Answer to Problem 11B.1E
The variable cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $32,500.
Explanation of Solution
Variable costs charged to Northern plant
Variable costs charged to Southern plant
2.
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.
To compute: The fixed cost of Transport Service Department that is charged to each plant.
2.
Answer to Problem 11B.1E
The fixed cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $90,000.
Explanation of Solution
Fixed cost charged to Northern plant
Fixed cost charged to Southern plant
3.
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.
To compute: The actual costs of $364,000 that can be treated as the Spending variances and are not charged to the plants.
3.
Answer to Problem 11B.1E
The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.
Explanation of Solution
Total variable costs charges by both the plants are $45,000 ($32,500 + $12,500) and fixed cost to both the plants are $300,000 ($210,000 + $90,000).
Total charges to both the plants are $345,000
The total actual cost incurred is $364,000
The remaining cost $19000 (
The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.
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Chapter 11B Solutions
MANAGERIAL ACCOUNTING F/MGRS.
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