The Lumber Division of Coronado Industries 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. O $1.75 O $1.40 220000 board feet O $2.50 O $1.25 $2.50 $1.25 $0.50 40000 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 120000 board feet, what is the minimum transfer price that the Lumber Division should accept? $5.00

The Lumber Division of Coronado Industries 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. O $1.75 O $1.40 220000 board feet O $2.50 O $1.25 $2.50 $1.25 $0.50 40000 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 120000 board feet, what is the minimum transfer price that the Lumber Division should accept? $5.00

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The Lumber Division of Paul Bunyon Homes Inc. produces and sells lumber that can be sold to outside customers or within the company to the Construction Division. The fllowing data have been gathered for the coming period: Lumber Division: Capacity Price per board foot Variable production cost per bd. ft. Variable selling cost per bd. ft. 200,000 board feet $2.50 $1.25 50,50 Construction Division: Board feet needed 60,000 Outside price paid per bd. ft. $2.00 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 150,000 board feet, what is the minimum transfer price per board foot that the Lumber Division could accept?
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