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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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1. Compute the minimum transfer price that Green Yard should be required to accept.
2. Compute the increase (decrease) in total contribution margin for Lawn Supplies, Inc. for this transfer.

Transcribed Image Text:Green Yard Company, a division of Lawn Supplies, Inc., produces lawn mowers. Green Yard
sells lawn mowers to home improvement stores, as well as to Lawn Supplies, Inc. The
following information is available for Green Yard's mowers:
Fixed cost per unit $180
Variable cost per
unit
Selling price per
unit
120
450
Lawn Supplies, Inc. can purchase comparable lawn mowers from an outside supplier for
$400. In order to ensure a reliable supply, the management of Lawn Supplies, Inc. ordered
Green Yard to provide 100,000 lawn mowers per year at a transfer price of $400 per unit.
Green Yard is currently operating at full capacity. It could avoid $8 per unit of variable selling
costs by selling internally.
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- When evaluating if a company should accept a new contract to produce more product it should: Evaluate all possible fixed cost of accepting the contract. Evaluate the propose contract using a contribution margin approach. Accept the new contract if the sales price for the product is equal to or higher than the current sale price. Accept the new contract if fixed costs will remain the same.arrow_forwardWhich analysis involves a comparison of the cost of operating additional robotic tailors with additional revenues generated by increased product sales?arrow_forward1. Fill in the missing numbers in the table. Use the following questions to help fill in the missing numbers in the table: a. What is the total contribution margin? b. What is the total variable expense? c. How many units were sold? d. What is the per-unit variable expense? e. What is the per-unit contribution margin? 2. Answer the following questions about breakeven analysis: a. What is the breakeven point in units? b. What is the breakeven point in sales dollars? 3. Answer the following questions about target profit analysis and safety margin: a. How many units must the company sell in order to earn a profit of $48,000? b. What is the current margin of safety in units? c. What is the margin of safety in sales dollars? d. What is the margin of safety in percentage?arrow_forward
- Your answer is incorrect. Divide the estimated average annual income by the average investment. Investment cost plus residual value, divided by two, equals average investment. Can you please redo it? Thanksarrow_forwardPlease answer part A thanksarrow_forwardPlease explain this statement thoroughly. "To estimate what the profit will be at various levels of activity, multiply the number of units to be sold above or below the break-even point by the unit contribution margin."arrow_forward
- Need help solving this, please.arrow_forwardWithin a relevant range, fixed costs per unit: Group of answer choices Decrease as the level of activity decreases. Decrease as the level of activity increases. Increase as the level of activity increases. Remain the same as the level of activity increases.arrow_forward1. Using the high-low method of cost estimation, estimate the behavior of the maintenance costs incurred by Nation’s Capital Fitness, Incorporated. Express the cost behavior pattern in equation form. Note: Round coefficient of X to 2 decimal places and other answer to the nearest whole dollar amount. 2. 2. Using your answer to requirement 1, what is the variable component of the maintenance cost? Note: Round your answer to 2 decimal places.arrow_forward
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