34.
When the selling division in an internal transfer has unsatisfied demand from outside
customers for the product that is being transferred, then the lowest acceptable transfer
price as far as the selling division is concerned is:
35.
Division A makes a part that it sells to customers outside of the company. Data concerning
this part appear below:
$75
$50
$400,000
25,000
36.
Part 43X costs the Southern Division of Norris Corporation $26 to make – direct materials
are $10, direct labor is $4, variable manufacturing overhead is $9, and fixed manufacturing
overhead is $3. Southern Division sells Part 43X to other companies for $30. The Northern
Division of Norris Corporation can use Part 43X in one of its products. The Southern
Division has enough idle capacity to produce all of the units of Part 43X that the Northern
Division would require. What is the lowest transfer price at which the Southern Division
should be willing to sell Part 43X to the Northern Division?
15–24
37.
38.
Division X makes a part that it sells to customers outside of the company. Data concerning
this part appear below:
Selling price to outside
customers
$50
15–25
Variable cost per unit
$30
Total fixed costs
$400,000
Capacity in units
25,000
39.
Division A makes a part that it sells to customers outside of the company. Data concerning
this part appear below:
Selling price to outside
customers
$40
Variable cost per unit
$30
Total fixed costs
$10,000
Capacity in units
20,000
Division B of the same company would like to use the part manufactured by Division A in
15–26
40.
The Raisin Division of Trail Mix Foods, Inc. had the following operating results last year:
Sales (150,000 pounds of raisins)
$60,000
Variable expenses
37,500
Contribution margin
22,500
Fixed expenses
12,000
Profit
$10,500
Raisin expects identical operating results this year. The Raisin Division has the ability to
produce and sell 200,000 pounds of raisins annually.
Assume that the Peanut Division of Trail Mix Foods wants to purchase an additional
20,000 pounds of raisins from the Raisin Division. Raisin will be able to increase its profit
by accepting any transfer price above:
15–27
41.
The Raisin Division of Trail Mix Foods, Inc. had the following operating results last year:
Sales (150,000 pounds of raisins)
$60,000
Variable expenses
37,500
Contribution margin
22,500
Fixed expenses
12,000
Profit
$10,500
42.
The Gear Division makes a part with the following characteristics:
Production capacity
25,000 units
Selling price to outside customers
$18
Variable cost per unit
$11
Fixed cost, total
$100,000
43.
The Gear Division makes a part with the following characteristics:
Production capacity
25,000 units
Selling price to outside customers
$18
Variable cost per unit
$11
Fixed cost, total
$100,000
44.
Division A produces a part with the following characteristics:
Capacity in units
50,000
Selling price per unit
$30
Variable costs per unit
$18
Fixed costs per unit
$3
15–32
45.
Division A produces a part with the following characteristics:
Capacity in units
50,000
Selling price per unit
$30
Variable costs per unit
$18
Fixed costs per unit
$3
46.
The Pillar Division of the Gothic Building Company produces basic pillars which can be
sold to outside customers or sold to the Lantern Division of the Gothic Company. Last
year, the Lantern Division bought all of its 25,000 pillars from Pillar at $1.50 each. The
following data are available for last year’s activities of the Pillar Division:
15–33
Capacity in units
300,000
pillars
Selling price per pillar to outside
customers
$1.75
Variable costs per pillar
$0.90
Fixed costs, total
$150,000
47.
The Pillar Division of the Gothic Building Company produces basic pillars which can be
sold to outside customers or sold to the Lantern Division of the Gothic Company. Last
year, the Lantern Division bought all of its 25,000 pillars from Pillar at $1.50 each. The
following data are available for last year’s activities of the Pillar Division:
Capacity in units
300,000
pillars
Selling price per pillar to outside
customers
$1.75
Variable costs per pillar
$0.90
Fixed costs, total
$150,000
15–35
48.
The Pillar Division of the Gothic Building Company produces basic pillars which can be
sold to outside customers or sold to the Lantern Division of the Gothic Company. Last
year, the Lantern Division bought all of its 25,000 pillars from Pillar at $1.50 each. The
following data are available for last year’s activities of the Pillar Division:
Capacity in units
300,000
pillars
Selling price per pillar to outside
customers
$1.75
Variable costs per pillar
$0.90
Fixed costs, total
$150,000
$1,250 decrease.
$10,250 increase.
$1,000 decrease.
$13,750 decrease.
49.
The Stake Division of the Outdoor Lumination Company produces stakes which can be
sold to outside customers or transferred to the Solar Light Division of the Outdoor
15–36
Lumination Company. Last year, the Solar Light Division bought 50,000 stakes from the
Stake Division at $2.50 each. The following data are available for last year’s activities in
the Stake Division:
Capacity in units
400,000
stakes
Quantity sold to outside customers
350,000
stakes
Selling price per stake to outside
customers
$3.00
Total variable costs per stake
$2.00
Fixed operating costs
$200,000
15–38
50.
The Stake Division of the Outdoor Lumination Company produces stakes which can be
sold to outside customers or transferred to the Solar Light Division of the Outdoor
Lumination Company. Last year, the Solar Light Division bought 50,000 stakes from the
Stake Division at $2.50 each. The following data are available for last year’s activities in
the Stake Division:
Capacity in units
400,000
stakes
Quantity sold to outside customers
350,000
stakes
Selling price per stake to outside
customers
$3.00
Total variable costs per stake
$2.00
Fixed operating costs
$200,000
15–40
51.
Division X makes a part that it sells to customers outside of the company. Data concerning
this part appear below:
$50
$30
$400,000
25,000