Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 10, Problem 10.37BE
1.
To determine
To calculate: Lowest acceptable transfer price and highest acceptable transfer price.
2.
To determine
To calculate: Transfer price for the tires if H Motors has a cost-plus transfer price policy of full absorption cost.
3.
To determine
To identify: Which transfer pricing strategy would be used by the Tire division if it is currently producing at full capacity and what would be the transfer price.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Your company has received an order for 20 units of aproduct. Th e labor cost to produce the item is $9.50 per hour. Th esetup cost for the item is $60 and material costs are $25 per unit. Th e item is sold for $92. Th e learning rate is 80 percent. Overheadis assessed at a rate of 55 percent of unit labor cost.(a) Determine the average unit cost for the 20 units if the fi rstunit takes four hours.(b) Determine the minimum number of units that need to bemade before the selling price meets or exceeds the averageunit cost.
Learning CurveBordner Company manufactures HVAC (heating, ventilation, and air conditioning) systems for commercial buildings. For each new design, Bordner faces a 90 percent learning rate. On aver-age, the first unit of a new design takes 600 hours. Direct labor is paid $25 per hour.
Required:1. Set up a table with columns showing: the cumulative number of units, cumulative average time per unit in hours, and cumulative total time in hours. Show results by row for total pro-duction of one unit, two units, four units, eight units, and sixteen units. (Round hour answers to two significant digits.)
2. What is the total labor cost if Bordner makes the following number of units: one, four, sixteen? What is the average cost per system for the following number of systems: one, four, or sixteen? (Round your answers to the nearest dollar.)
3. Using the logarithmic function, set up a table with columns showing: the cumulative number of units, cumulative average time per unit in hours,…
E8-30A Determine maximum outsourcing price (Learning Objective 6)
lamilton Containers manufactures a variety of boxes used for packaging. Sales of its
Model A20 box have increased significantly to a total of 430,000 A20 boxes. Hamilton
has enough existing production capacity to make all of the boxes it needs. The variable
cost of making each A20 box is $0.80. By outsourcing the manufacture of these A20
boxes, Hamilton can reduce its current fixed costs by $103,200. There is no alternative
use for the factory space freed up through outsourcing, so it will just remain idle.
What is the maximum Hamilton will pay per Model A20 box to outsource production
of this box?
Chapter 10 Solutions
Managerial Accounting (5th Edition)
Ch. 10 - (Learning Objective 1) Companies often...Ch. 10 - (Learning Objective 1) Which of the following is...Ch. 10 - (Learning Objective 1) In terms of responsibility...Ch. 10 - (Learning Objective 2) Which of the following is...Ch. 10 - (Learning Objective 2) A segment margin is the...Ch. 10 - Prob. 6QCCh. 10 - Prob. 7QCCh. 10 - Prob. 8QCCh. 10 - Prob. 9QCCh. 10 - Prob. 10QC
Ch. 10 - Identify and understand responsibility centers...Ch. 10 - Identify types of responsibility centers (Learning...Ch. 10 - Identify centralized and decentralized...Ch. 10 - Prob. 10.4SECh. 10 - Prob. 10.5SECh. 10 - Prob. 10.6SECh. 10 - Calculate ROI (Learning Objective 3) Refer to Epic...Ch. 10 - Prob. 10.8SECh. 10 - Prob. 10.9SECh. 10 - Prob. 10.10SECh. 10 - Prob. 10.11SECh. 10 - Interpret a performance report (Learning Objective...Ch. 10 - Prob. 10.13SECh. 10 - Classify KPIs by balanced scorecard perspective...Ch. 10 - Use vocabulary terms (Learning Objectives 1, 2, 3,...Ch. 10 - Prob. 10.16SECh. 10 - Identify type of responsibility center (Learning...Ch. 10 - Complete and analyze a performance report...Ch. 10 - Prepare a segment margin performance report...Ch. 10 - Compute and interpret the expanded ROI equation...Ch. 10 - Prob. 10.21AECh. 10 - Prob. 10.22AECh. 10 - Comparison of ROI and residual income (Learning...Ch. 10 - Prob. 10.24AECh. 10 - Comprehensive flexible budget problem (Learning...Ch. 10 - Prepare a flexible budget performance report...Ch. 10 - Work backward to find missing values (Learning...Ch. 10 - Construct a balanced scorecard (Learning Objective...Ch. 10 - Sustainability and the balanced scorecard...Ch. 10 - Identify type of responsibility center (Learning...Ch. 10 - Complete and analyze a performance report...Ch. 10 - Prob. 10.32BECh. 10 - Prob. 10.33BECh. 10 - Prob. 10.34BECh. 10 - Prob. 10.35BECh. 10 - Prob. 10.36BECh. 10 - Prob. 10.37BECh. 10 - Prob. 10.38BECh. 10 - Prob. 10.39BECh. 10 - Prob. 10.40BECh. 10 - Prob. 10.41BECh. 10 - Sustainability and the balanced scorecard...Ch. 10 - Prepare a budget with different volumes for...Ch. 10 - Prepare and interpret a performance report...Ch. 10 - Prob. 10.45APCh. 10 - Prob. 10.46APCh. 10 - Prob. 10.47APCh. 10 - Evaluate subunit performance (Learning Objectives...Ch. 10 - Prob. 10.49BPCh. 10 - Prob. 10.50BPCh. 10 - Evaluate divisional performance (Learning...Ch. 10 - Prob. 10.52BPCh. 10 - Determine transfer price at a manufacturer under...Ch. 10 - Evaluate subunit performance (Learning Objectives...Ch. 10 - Prob. 10.55SC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Bordner Company manufactures HVAC (heating, ventilation, and air conditioning) systems for commercial buildings. For each new design, Bordner faces a 90 percent learning rate. On average, the first unit of a new design takes 600 hours. Direct labor is paid 25 per hour. Required: 1. Set up a table with columns showing: the cumulative number of units, cumulative average time per unit in hours, and cumulative total time in hours. Show results by row for total production of one unit, two units, four units, eight units, and sixteen units. (Round hour answers to two significant digits.) 2. What is the total labor cost if Bordner makes the following number of units: one, four, sixteen? What is the average cost per system for the following number of systems: one, four, or sixteen? (Round your answers to the nearest dollar.) 3. Using the logarithmic function, set up a table with columns showing: the cumulative number of units, cumulative average time per unit in hours, cumulative total time in hours, and the time for the last unit. Show results by row for each of units one through eight. (Round answers to two significant digits.)arrow_forwardHarriman Industries manufactures engines for the aerospace industry. It has completed manufacturing the first unit of the new ZX-9 engine design. Management believes that the 1,000 labor hours required to complete this unit are reasonable and is prepared to go forward with the manufacture of additional units. An 80 percent cumulative average-time learning curve model for direct labor hours is assumed to be valid. Data on costs are as follows: Required: 1. Set up a table with columns for cumulative number of units, cumulative average time per unit in hours, and the cumulative total time in hours. Complete the table for 1, 2, 4, 8, 16, and 32 units. (Round hours to one significant digit.) 2. What are the total variable costs of producing 1, 2, 4, 8, 16, and 32 units? What is the variable cost per unit for 1, 2, 4, 8, 16, and 32 units?arrow_forwardCrede Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $10.10 from an outside vendor. Division A needs 11,100 lamps for the coming year. Division B has the capacity to manufacture 49,600 lamps annually. Sales to outside customers are estimated at 38,500 lamps for the next year. Reading lamps are sold at $12.09 each. Variable costs are $6.87 per lamp and include $1.41 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $75,900. Consider the following independent situations. What should be the minimum transfer price accepted by Division B for the 11,100 lamps and the maximum transfer price paid by Division A? (Round answers to 2 decimal places, e.g. 15.25.) Per unit Minimum transfer price accepted by Division B $_ Maximum transfer…arrow_forward
- Average labor cost for the first 700 units of a product is RO 50 and the average labor cost of first 1400 units is RO 45. Average time per unit is 100 minutes. The learning ratio and the average labour cost for first 2800 units will be: a. 80% and RO 36.000 b. 90% and RO 40.500 c. 85% and RO 38.250 d. 95% and RO 42.750arrow_forwardThe following information is provided to you: Time taken to produce first 8 shock pads 640 hours Time taken to produce first 16 shock pads 1200 hours Calculate the learning curve The following information is provided to you: Direct labour needed to make first machine. 1000 hoursLearning curve. 80%Direct labour cost. R300 per hourDirect materials cost. R180000 per machine Fixed cost for machines at each cumulative production R800000 Calculate the total direct hours required to manufacture four (4) machines. ( Indicate both average time per unit as well as cumulative time per unit for all theunits) Calculate the total costs to manufacture 4 machinesarrow_forwardBlue Spruce Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $10 from an outside vendor. Division A needs 8,200 lamps for the coming year. Division B has the capacity to manufacture 41,000 lamps annually. Sales to outside customers are estimated at 32,800 lamps for the next year. Reading lamps are sold at $12 each. Variable costs are $7 per lamp and include $1 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $65,600. Consider the following independent situations. (a) What should be the minimum transfer price accepted by Division B for the 8,200 lamps and the maximum transfer price paid by Division A? Minimum transfer price accepted by Division B Maximum transfer price paid by Division A $ $ per unit per unitarrow_forward
- The manager of an e-learning company identified a new course that they could create and sell for $100 per student. The costs for adding this new course to their product offering would be: $2,100 per month to lease additional space, $290 per month for insurance, $4,900 per month for support staff, $3,600 per month for sales staff, and variable costs of $4 per student. They can sell to a maximum of 750 students per month. a. For the company to break even per month, how many students would have to purchase the course? 0 Round up to the next whole number b. If they made a profit of $34,650 last month, how many students purchased the course?arrow_forwardProfessional University teaches a large range of undergraduate courses. It is interested in determining the cost equation for the facilities cost as a function of student credit hours so that it an more accurately budget its facilities costs as enrollment grows. Information for the high and low cost semesters and volumes for last 5 years appears below Semester Student Cresit Hours Facilities Cost Spring 2007 250,000 $500,000 Fall 2004 300,000 $530,000 Using the high low method, with student credit hours as the activity driver, wht is the equation for facilities cost (FC) as a function of student credit hours?arrow_forwardBased on recent experience, a company knows that its production follows an 80% learning eurve. The unit variable cost of the 100 unit, which the company just produced, was $30. To complete a price quote for a customer with a special order for another 100 units, the compary needs to knew what their unit variable cost will be at the end of the special project. Which of the following is the best answer? O A. $37.50 O B. $30.00 OC. $24.00 D D. $6.00 DE. Cannot be determinec from the information givenarrow_forward
- NUBD Company is planning to introduce a new product with an 80 percent learning rate for production for batches of 1,000 units. The variable labor costs are P30 per unit for the first 1,000-unit batch. Each batch requires 100 hours. There are P10,000 in fixed costs not subject to learning. What is the cumulative total time (labor hours) to produce 16,000 units based on the cumulative average-time learning curve? 655.36 hours 256 hours 160 hours 409.6 hoursarrow_forwardThames Assurance Company sells a variety of life and health insurance products. Recently, Thames developed a long-term care policy for sale to members of university and college alumni associations. Thames estimated that the sale and service of this type of policy would be subject to a 90 percent cumulative average-time learning curve model. Each unit consists of 350 policies sold. The first unit is estimated to take 1,000 hours to sell and service. Required: 1. Set up a table with columns for cumulative number of units, cumulative average time per unit in hours, and the cumulative total time in hours. Complete the table for 1, 2, 4, 8, 16, and 32 units. 2. Suppose that Thames revises its assumption to an 80 percent learning curve. How will this affect the amount of time needed to sell and service eight units? How do you suppose that Thames estimates the percent learning rate?arrow_forwardTriad Children's Center (TCC), a non-profit organization, uses relevant cost analysis to determine whether new services are desirable. TCC is looking at adding a new educational program for grade school children who are having difficulty with their reading and math skills. The following relevant costs are expected if the program is accepted: Costs (per year) Program Director salary $ 39,000 Part-time Assistants $ 28,000 Variable cost per child $ 900 TCC estimates that a maximum of 40 children will participate in this program in the first year. If TCC decides to implement this program, funding will be received from the City Chamber of Commerce ($50,000) and a local Private University Endowment Fund ($35,000). Calculate the expected surplus or deficit from operations given the above information.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY