Answer:
b. $26,740
Explanation:
The computation of the total amount of overhead allocated is shown below:
overhead allocated is
= (actual direct labor hour × overhead rate per direct labor hour) + (Actual machine hour × overhead rate per machine hour)
= (550 × 28) + (270 × 42]
= $15,400 + $11,340
= $26,740
hence, the total amount of overhead allocated is $26,740
Prime Computers is a company that sells computers and software. The company has a website that allows customers to post comments about the computers and software it sells. Why is it important for this company to encourage customer feedback
Group of answer choices.
A. Most online shoppers will only buy products if they can voice their opinions about them after the purchase.
B. Most online shoppers search the Internet for ratings and reviews before making major purchase decisions.
C. Negative consumer feedback can actually attract more customer interest in the product.
D. Allowing consumer feedback makes it less likely that consumers will provide their feedback.
E. Consumers are more likely to say positive things about companies that value their opinions.
Answer:
B. Most online shoppers search the Internet for ratings and reviews before making major purchase decisions.
Explanation:
Customer relationship management can be defined as a strategic process which typically involves combining strategies, techniques, practices and technology so as to effectively and efficiently manage their customer data in order to improve and enhance customer satisfaction. Thus, this set of employees are saddled with the responsibility of ensuring the customer are satisfied and happy with their service at all times.
This ultimately implies that, customer relationship management is focused on developing an ongoing connection between a business firm (organization) and all of its customers, as well as potential customers.
Hence, it is very important for Prime Computers to encourage customer feedback on its website and as a policy because most online shoppers (customers) usually engage in an online search in order to see other customer's ratings and reviews of company's product or service before making major purchase decisions.
Wilson's Antiques is considering a project with an initial cost today of $10,000. The project has a life of 2 years with cash inflows of $6,500 a year. Should the firm decide to wait one year to commence this project, the initial cost will increase by 5 percent, and the cash inflows will increase to $7,500 a year. What is the value of the option to wait at a discount rate of 10 percent
Answer:
Wilson's Antiques
The value of the option to wait is:
= $1,236.
Explanation:
a) Data and Calculations:
Alternative 1 Alternative 2
Now Wait (one year after)
Initial cost of project $10,000 $10,500 ($10,000 * 1.05)
Increase in initial cost 5%
Project's estimated life 2 years 2 years
Annual cash inflows $6,500 $7,500
Discount rate = 10%
PV annuity factor at 10% 1.736 1.736
Present value of annuity $11,284 $13,020
Net present value $1,284 $2,520
The value of the option to wait is $1,236 ($2,520 - $1,284)
During the Middle Ages, the African city of Taghaza quarried salt in 200-pound blocks to be sent to the salt market in Timbuktu, in present-day Mali. Travelers report that Taghazans used salt instead of wood to construct buildings. How would the elasticity of demand for wood in Taghaza have compared with the elasticity of demand for wood in other towns without big salt mines
Answer:
a. it would have been more elastic.
Explanation:
I need help with 1.5 ,1.6 and 1.7 please
Answer:
1.5.1 Business venture/Venture capital
1.5.2 a) Risk: High risk for the investor(s), if research is not properly done
b) period of investment: Inexperienced
business owners that make wrong
business decisions may experience
big losses/closing down of an existing
business.
1.6.1 unit trusts
1.6.2 - share price may fluctuate
- unit trusts are not allowed to borrow,
therefore reducing potential returns.
- not good for people who want to invest for
a short period
- not good for people who want to avoid
risks at all costs
1.5.1 Stocks, also known as shares or equities, is the best type of investment opportunity i would choose in future.
It is most well-known and simple type of investment. When you buy stock, you’re buying an ownership stake in a publicly traded company.
Benefit of investment in stocks:
A. Dividend it the profit that i will get on shares
B. When I will buy a stock, there will be a hope that the price will go up so I can then sell it for a profit.
1.5.2 (a) The risk is that the price of the stock could go down, in which case I’d lose money.
1.5.2 (b) Shares in a company can be kept as long as I wish.
1.6.1 The investment chosen by Pearl is the investment in shares (joint stock exchange)
1.6.2 Disadvantages are dividend uncertainty, high risk, fluctuation in market price, limited control, residual claim etc.
*I hope it is helpful
If the inflation rate is equal to the nominal interest rate, the real interest rate is?
negative.
zero.
either positive or zero.
positive.
Answer: zero
Explanation:
It should be noted that real interest rate is the equal to the nominal interest rate after the inflation rate has been deducted.
Real Interest rate = Nominal rate - Inflation rate
For example let's say the nominal Interest rate and the inflation rate are both 5%, then the real interest rate will be:
Real Interest rate = Nominal rate - Inflation rate
Real interest rate = 5% - 5% = 0
How could a strategy plan be used by a local restaurant chain
Explanation:
A strategic plan for a restaurant should involve decisions regarding advertising and how customers view the restaurant from the outside. Your advertising strategy should address your customers in a way that is geared toward your primary demographic.
When the market for ___________ money is drawn with the value of money on the vertical axis and the quantity of money on the horizontal axis, the price level increases if money demand shifts _____________
Answer:
money demand; leftward
Explanation:
Money demand depends upon the interest rate as well as the price level.
When the money market is been drawn with a value of the money on the [tex]\text{vertical axis}[/tex], the quantity of money demanded is increased and the price level also increases. Also the curve slopes downward. But it decreases the the money supply as well as the price level.
When the money demand shifts towards left or when the money supply shifts rightwards, the price level increases.
During the current year, assets increased from $11,000 to $19,000, and liabilities decreased from $9,000 to $7,500. If no additional capital contributions were made during the year, dividends totaled $4,000, and expenses totaled $21,000, determine total revenues for the year
Answer:
$34,500
Explanation:
Calculation to determine total revenues for the year
Using this formula
Total revenues=Increase in Assets+Decreased in liabilities+Dividends+Expenses
Let plug in the formula
Total revenues=($11,000-$19,000)+($9,000-$7,500)+$4,000+$21,000
Total revenues=$8,000+$1,500+$4,000+$21,000
Total revenues=$34,500
Therefore total revenues for the year is $34,500
Suppose that the price of a cupcake is $4. At this price, 50 cupcakes will be demanded. If the price rises to $5 per cupcake, consumer surplus will
Answer: fall by less than $50.
Explanation:
The options are:
• fall by more than $50.
• fall by less than $50.
• rise by less than $50.
• rise by more than $50.
Expert Answer
Consumer surplus, is referred to as the economic measure of the excess benefit that a customer gets. The consumer surplus is the difference between the amount that the customer is willing to pay and the amount that he or she eventually pays.
Based on the question, the total Price paid is: 50 × $4 = $200
Total Revised Price = 50 × $5 = $250
Therefore, there will be a fall by $50 that's ($250 - $200).
Operating Cash Flows (Direct Method)
Refer to the information in Exercise EB-31. Calculate the net cash flow from operating activities using the direct method. Show a related cash flow for each revenue and expense.
Answer:
The method to calculate Cash Flow from Direct Method is explained as follows:
Explanation:
The method to calculate Cash Flow from Direct Method is explained as follows:
Cash Flows
Direct Method
+ Cash received from Customer
- Cash paid to suppliers
- Cash payments for operating expenses
- Cash payments for interest
- Cash payments for taxes
= Net Cash flow from Operating Activities.
Alfredo was one of many employees who received a generous Christmas bonus, which carried __________ value to him.
Answer:
Surface.
Explanation:
An employee can be defined as an individual who is employed by an employer of labor to perform specific tasks, duties or functions in an organization.
Basically, an employee is saddled with the responsibility of providing specific services to the organization or company where he is currently employed while being paid a certain amount of money hourly, daily, weekly, or monthly depending on the contractual agreement between the two parties (employer and employee).
Hence, while an employer may be the owner of a business firm or company, an employee is a subordinate employed to provide unwavering services to the employer while also, being professional and diligent at all times.
In this scenario, Alfredo was one of many employees who received a generous Christmas bonus, which carried surface value to him because it's an amount of money that was received by all.
When you send a negative employment message, recipients have an emotional stake, so which approach is best?
Question 1 options:
Discreet
Indirect
Direct
Face-to-face
Answer:
Sería directo.
Explanation:
Espero ayudarte
According to the video, what qualities or items do Cargo and Freight Agents need? Check all that apply.
college degree
familiarity with computers
driving skills
supervisory experience
high-school diploma
answers are 2 and 5
Answer:
B
E
Explanation:
S945274 is correct
Answer:
2 and 5 r the answer
Explanation:
April 30 May 31
Inventories
Raw materials $37,000 $42,000
Work in process 9,800 18,600
Finished goods 58,000 34,900
Activities and information for May
Raw materials purchases (paid with cash) 189,000
Factory payroll (paid with cash) 150,000
Factory overhead
Indirect materials 7,000
Indirect labor 34,500
Other overhead costs 101,000
Sales (received in cash) 1,200,000
Pre-determined overhead rate based on direct labor cost 55%
Compute the following amounts for the month of May using T-accounts
1. Cost of direct materials used.
2. Cost of direct labor used.
3. Cost of goods manufactured.
4. Cost of goods sold.
5. Gross profit.
6. Overapplied or underapplied overhead.
Answer:
1. Cost of direct materials used
= $177,000
2. Cost of direct labor used
= $150,000
3. Cost of goods manufactured
= $400,700
4. Cost of goods sold
= $423,800
5. Gross profit
= $776,200
6. Overapplied or underapplied overhead
= $60,000 Underapplied
Explanation:
a) Data and Calculations:
Inventories
Raw materials $37,000 $42,000
Work in process 9,800 18,600
Finished goods 58,000 34,900
Activities and information for May
Raw materials purchases (paid with cash) 189,000
Factory payroll (paid with cash) 150,000
Factory overhead
Indirect materials 7,000
Indirect labor 34,500
Other overhead costs 101,000
Sales (received in cash) 1,200,000
Predetermined overhead rate based on direct labor cost = 55%
T-accounts:
Raw materials
Account Titles Debit Credit
Beginning balance $37,000
Cash 189,000
Factory overhead $7,000
Work in process 177,000
Ending balance $42,000
Totals $226,000 $226,000
Work in process
Account Titles Debit Credit
Beginning balance $9,800
Direct materials 177,000
Direct labor 150,000
Applied overhead 82,500
Finished goods $400,700
Ending balance $18,600
Totals $419,300 $419,300
Finished goods
Account Titles Debit Credit
Beginning balance $58,000
Work in process 400,700
Cost of goods sold $423,800
Ending balance $34,900
Totals $458,700 $458,700
Factory overhead
Account Titles Debit Credit
Indirect materials $7,000
Indirect labor 34,500
Other costs 101,000
Work in process $82,500 (55% of direct labor)
Under-applied overhead 60,000
Total $142,500 $142,500
Sales (received in cash) 1,200,000
Cost of goods sold 423,800
Gross profit = 776,200
Perez Corporation has the following financial data for the years 20X1 and 20X2:
20X1 20X2
Sales $8,000,000 $10,000,000
Cost of goods sold 6,000,000 9,000,000
Inventory 800,000 1,000,000
Required:
a. Compute the inventory turnover for each year using the formula Sales/Inventory.
b. Compute inventory turnover based on an alternative calculation that is used by many financial analysts, Cost of goods sold/Inventory, for each year.
Answer:
Perez Corporation
a. Inventory turnover = Sales/Inventory
20X1 = 10x
20X2 = 10x
b. Inventory turnover = Cost of goods sold/Inventory
20X1 = 7.5x
20X2 = 9x
Explanation:
a) Data and Calculations:
20X1 20X2
Sales $8,000,000 $10,000,000
Cost of goods sold 6,000,000 9,000,000
Inventory 800,000 1,000,000
Average inventory = $900,000 ($1,800,000/2)
a. Inventory turnover = Sales/Inventory
20X1 = 10x ($8,000,000/$800,000)
20X2 = 10x ($10,000,000/$1,000,000)
b. Inventory turnover = Cost of goods sold/Inventory
20X1 = 7.5x ($6,000,000/$800,000)
20X2 = 9x ($9,000,000/$1,000,000)
Mia and Mario specialize in producing the item in which she or he has a comparative advantage. Then they trade one pasta dish for one pizza.. Before specialization and trade, Mia and Mario produce 4 dishes of pasta and 4 pizzas an hour each. What are the total gains from specialization and trade?
Answer:
4, 4
Explanation:
Now mia has comparative advantage in pasta production while Mario has advantage in pizza making
Before they both specialized, one was making 4 pizza and 4 pasta while the other made 4 pasta and 4 pizza.
Total pizza made = 8
Total pasta made = 8
After they specialized,
Maria makes 4 + 8 = 12 pizza
Mia makes 4+8 = 12 pizza
12-8= 4
So they both make 4 more pasta and 4 more pizza
Lindon Company is the exclusive distributor for an automotive product that sells for $54.00 per unit and has a CM ratio of 30%. The company’s fixed expenses are $388,800 per year. The company plans to sell 28,600 units this year. Required: 1. What are the variable expenses per unit? (Round your "per unit" answer to 2 decimal places.) 2. What is the break-even point in unit sales and in dollar sales? 3. What amount of unit sales and dollar sales is required to attain a target profit of $226,800 per year? 4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $5.40 per unit. What is the company’s new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $226,800?
Answer:
Results are below.
Explanation:
First, we need to calculate the unitary variable cost:
Unitary variable cost= (1 - Contribution margin ratio)*selling price
Unitary variable cost= 0.70*54
Unitary variable cost= $37.8
Now, the break-even point in units and dollars:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 388,800 / (54 - 37.8)
Break-even point in units= 24,000
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 388,800 / 0.3
Break-even point (dollars)= $1,296,000
If the desired profit is $226,800; the following formula is required:
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
Break-even point in units= (338,800 + 226,800) / 16.2
Break-even point in units= 34,914
Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio
Break-even point (dollars)= 565,600 / 0.3
Break-even point (dollars)= $1,885,333
Finally, if the variable cost per unit decreases by $5.4:
Unitary variable cost= $32.4
Break-even point in units= 388,800 / (54 - 32.4)
Break-even point in units= 18,000
Contribution margin ratio= unitary CM / Selling price
Contribution margin ratio= 21.6/54= 0.4
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 388,800 / 0.4
Break-even point (dollars)= 972,000
Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio
Break-even point (dollars)= (388,800 + 226,800) / 0.4
Break-even point (dollars)= $1,539,000
A company's perpetual preferred stock currently trades at $87.50 per share, and it pays an $8.00 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 5.00% of the issue price. What is the firm's cost of preferred stock?
a. 8.25%
b. 9.14%
c. 8.69%
d. 9.62%
Answer:
9.62%
Explanation:
The firm cost of preferred stock can be calculated as follows
Dividend= $8
Price= $87.50
Floation cost= 5%
= 5/100
= 0.05
= 8/87.50(1-0.05)
= 8/87.50(0.95)
= 8/83.125
= 0.0962×100
= 9.62%
Hence the firm cost of preferred stock is 9.62%
a. On March 2, Sheridan Company purchased $862,000 of merchandise from Skysong Company, terms 2/10, n/30.
b. On March 6, Sheridan Company returned $110,700 of the merchandise purchased on March 2.
c. On March 12, Sheridan Company paid the balance due to Skysong Company.
Requried:
Prepare the journal entry to record these transaction.
Answer:
Sheridan Company
Journal Entries:
a. March 2: Debit Inventory $862,000
Credit Accounts Payable (Skysong Company) $862,000
To record the purchase of merchandise on credit terms 2/10, n/30.
b. March 6: Debit Accounts Payable (Skysong Company) $110,700
Credit Inventory $110,700
To record the return of merchandise on account.
c. March 12: Debit Accounts Payable (Skysong Company) $751,300
Credit Cash $736,274
Credit Cash Discounts $15,026
To record the payment on account in full settlement, including cash discounts.
Explanation:
1) Data and Analysis:
a. March 2: Inventory $862,000 Accounts Payable (Skysong Company) $862,000 terms 2/10, n/30.
b. March 6: Accounts Payable (Skysong Company) $110,700 Inventory $110,700
c. March 12: Accounts Payable (Skysong Company) $751,300 Cash $736,274 Cash Discounts $15,026
Which of the three types of business is the shoe store?
Answer:
I think a shoe store would be considered a corporation, however it could be a sole proprietorship meaning the business is solely owned and taken care of by one person, but that's unlikely since a shoe store would need employees to maintain their store.
Explanation:
There are three categories of business which are the following:(1) sole proprietorship, (2) partnership, and (3) corporation. Within each category, there are several variations.
Hope I helped, have a nice day :)
I think home ownership is important to most Americans today because they want to have the pride of owning their own home and they want to change it up to make it their own
Answer:
owww
Explanation:
LOL Music Store uses the perpetual inventory system to account for its merchandise. On November 17, it purchased $1,000 of merchandise with terms of 2/5,n/60. If payment is made on November 21. Demonstrate the required journal entry to record the payment.
Answer:
LOL Music Store
Journal Entry to record the payment:
November 21:
Debit Accounts Payable $1,000
Credit Cash $980
Credit Cash Discounts $20
To record the payment on account.
Explanation:
a) Data and Analysis:
November 17: Inventory $1,000 Accounts Payable $1,000
November 21: Accounts Payable $1,000 Cash $980 Cash Discounts $20
b) When LOL Music Store uses the perpetual inventory system to account for its merchandise, it debits the Inventory account instead of the Purchases account on November 17. The credit entry goes to the Accounts Payable account. On November 21, when payment is made, the Accounts Payable is debited while the Cash account and Cash Discounts are correspondingly credited.
Suppose the economy is currently in short run macroeconomic equilibrium, with actual GDP bigger than potential GDP.
(a) Depict this situation using AD-AS, being sure to label all curves and axes. What is the gap called?
(b) In the long run, what will happen to prices and output? Depict graphically and explain.
Answer:
attached below
Explanation:
Given that the economy has its actual GDP > potential GDP
A) using AD-AS to depict the situation
attached below is the graph
The gap( Lf - L1 ) is called inflationary gap
x-axis = real GDP , Y-axis = price level,
AD = aggregate demand curve , S = short run aggregate supply curve
L = long run aggregate supply curve,
B) In the long run the graph will adjust to the full employment level
attached below is the graph
The Zeron Corporation wants to purchase a new machine for its factory operations at a cost of $950,000. The investment is expected to generate $350,000 in annual cash flows for a period of four years. The cost of capital is 14%. The old machine can be sold for $50,000. The machine is expected to have zero value at the end of the four-year period. Income taxes are not considered. What is the net present value of the investment
Answer:
$119,799.31
Explanation:
The net present value of purchasing the new machine is the present value of its future cash flows discounted at the 14% cost of capital minus the initial investment outlay.
The initial investment outlay is the cost of the new machine minus the salvage value of the old machine, since the proceeds received from disposing of the old machine can be used in funding the new machine partly.
Initial investment outlay=$950,000-$50,000
Initial investment outlay=$900,000
NPV=$350,000/(1+14%)^1+$350,000/(1+14%)^2+$350,000/(1+14%)^3+$350,000/(1+14%)^4-$900,000
NPV=$119,799.31
Stout Corporation had net income of $200,000 and paid dividends to common stockholders of $40,000 in 2012. The weighted average number of shares outstanding in 2012 was 50,000 shares. Stout Corporation's common stock is selling for $75 per share on the New York Stock Exchange. Stout Corporation's price-earnings ratio is Group of answer choices
Answer:
18.75
Explanation:
The computation of the price-earning ratio is given below:
We know that
Price-Earning Ratio = Price Per Share ÷ Earning Per Share
Earning Per Share = Net Earnings ÷ Outstanding Shares
So,
Price-Earning Ratio = Price Per Share ÷ (Net Earnings ÷ Outstanding Shares)
= $75 ÷ ($200,000 ÷ 50,000)
= 75 ÷ 4
= 18.75
You’ve borrowed $21,518 on margin to buy shares in Ixnay, which is now selling at $40.6 per share. You invest 1,060 shares. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later, the stock price changes to $38 per share. a. Will you receive a margin call?
Answer:
a. No, you will NOT receive a margin call.
b. The price at which you will receive the margin call is $31.23 per share.
Explanation:
Note: This question is not complete as the part b of the requirement is omitted. To complete the question, the omitted part b is therefore provided before answering the question as follows:
b. At what price will you receive the margin call?
The explanation of the answer is now provided as follows:
a. Will you receive a margin call?
Margin loan = $21,518
Total amount invested = Number shares purchased * Selling price per share when purchased = 1,060 * $40.60 = $43,036
Initial equity = Total amount invested - Margin loan = $43,036 - $21,518 = $21,518
Market value of the stock two days later = Number shares purchased * Selling price per share two days later = 1,060 * $38 = $40,280
New equity = Market value of the stock two days later - Margin loan = $40,280 - $21,518 = $18,762
Percentage margin = New equity / Market value of the stock two days later = $18,762 / $40,280 = 0.4658, or 46.58%
Since your percentage margin of 46.58% is lower than the new required maintenance margin of 35%, you will NOT receive a margin call.
b. At what price will you receive the margin call?
Price to receive the margin call = (Margin loan / (100% - Maintenance margin after two days)) / Number of shares purchased = ($21,518 / (100% - 35%)) / 1,060 = $31.23
Therefore, the price at which you will receive the margin call is $31.23 per share.
An example of a positive statement would be
Answer:
D
Explanation:
it would be the last option
_ refers to exploiting price differences on identical or similar goods, services, assets or factors in different markets. Group of answer choices Externalization Internalization Rationalization Arbitrage Speculation
Answer:
Arbitrage
Explanation:
Arbitrage refers to exploiting price differences on identical or similar goods, services, assets or factors in different markets.
This ultimately implies that, arbitrage allows an individual to profit from the price difference between similar goods, commodity, securities or currency in different markets.
Basically, an individual might decide to almost simultaneously purchase a financial instrument such as a commodity, securities or currency and sell it in a different form or market.
For example, if a stock is trading at £80 on the London Stock Exchange (LSE) while it is trading for £81 on the Nigeria Stock Exchange (NSE) at the same time. John buy the stock on the LSE and sells the same shares immediately on the NSE and earns a profit of £1 per share. Thus, this is simply an arbitrage.
In conclusion, an arbitrage is a type of trade that is caused as a result of market inefficiency.
Prepare a Master Schedule given the following information:
Forecast for each week for an eight-week schedule is 75 units.
The Master Production Schedule (MPS) rule is to schedule production if the projected on-hand inventory would be negative without it.
Committed customer orders are as follows:
WeeWeek CjusCustomer order
1 75
2 53
3 26
4 18
Use a production lot size of 100 units and no beginning inventory.
Week
1 2 3 4 5 6 7 8
Forecast 75 75 75 75 75 75 75 75
Customer Orders 75 53 26 18 0 0 0 0
Projected On-Hand Inventory
MPS
Formulas for Projected On-Hand Inventory
Week 1 = Beginning Inventory + MPS – MAX (Forecast:Customer Order)
Highest number
Weeks 2 – 8 = Previous Week Inventory + MPS – (Forecast: Customer Order)
Because the problem says we cannot have any negative inventory, then we require MPS shipments to come in. When a shipment comes in, it is in lots of 100. In this problem, MPS will be added for Weeks 1,2,3 and Weeks 5, 6, 7. No MPS shipments are expected in Week 4 or Week 8.
Answer:
Master Production Schedule (MPS)
Week 1 2 3 4 5 6 7 8
Forecast Customer Order 75 75 75 75 75 75 75 75
Customer Orders 75 53 26 18 0 0 0 0
Projected On-Hand Inventory 25 50 75 0 25 50 75 0
MPS 100 100 100 0 100 100 100 0
Explanation:
a) Data and Calculations:
Master Production Schedule (MPS)
Week 1 2 3 4 5 6 7 8
Forecast Customer Order 75 75 75 75 75 75 75 75
Customer Orders 75 53 26 18 0 0 0 0
Projected On-Hand Inventory
MPS
Formulas for Projected On-Hand Inventory
Week 1 = Beginning Inventory + MPS – MAX (Forecast:Customer Order)
Highest number
Weeks 2 – 8 = Previous Week Inventory + MPS – (Forecast: Customer Order)
Terrell Corporation produces various products used in the construction industry. The plumbing division produces and sells100,000 copper fittings each month. Relevant information for last month follows:
Total sales (all external) $250,000
Expenses (all on a unit base):
Variable manufacturing $0.50
Fixed manufacturing .25
Variable selling .30
Fixed selling .40
Variable G & A .15
Variable G & A .50
Total $2.10
Top-level managers are trying to determine how a transfer price can be set on a transfer of 10,000 of the copper fittings from the Plumbing Division to the Bathroom Products Division.
1. Refer to Terrell Corporation. A transfer price based on variable cost will be set at ________ per unit.
a) $0.50
b) $0.65
c) $0.95
d) $1.10
2. Refer to Terrell Corporation. A transfer price based on full production cost would be set at ______ per unit.
a) $0.75
b) $1.45
c) $1.60
d) $2.10
3. Refer to Terrell Corporation. A transfer price based on market price would be set at __________ per unit.
a) $2.10
b) $2.50
c) $1.60
d) $2.25
4. Refer to Terrell Corporation. If the Plumbing Division is operated as an autonomous investment center and its capacity is 100,000 fittings per month, the per-unit transfer price is not likely to be below
a) $0.75
b) $1.60
c) $2.10
d) $2.50
Answer:
Terrell Corporation
1. Refer to Terrell Corporation. A transfer price based on variable cost will be set at ________ per unit.
c) $0.95
2. Refer to Terrell Corporation. A transfer price based on full production cost would be set at ______ per unit.
d) $2.10
3. Refer to Terrell Corporation. A transfer price based on market price would be set at __________ per unit.
b) $2.50
4. Refer to Terrell Corporation. If the Plumbing Division is operated as an autonomous investment center and its capacity is 100,000 fittings per month, the per-unit transfer price is not likely to be below
d) $2.50
Explanation:
a) Data and Calculations:
Monthly production and sales units of the plumbing division = 100,000
Total sales (all external) $250,000
Expenses (all on a unit base):
Variable manufacturing $0.50
Fixed manufacturing .25
Variable selling .30
Fixed selling .40
Variable G & A .15
Fixed G & A .50
Total $2.10
Variable manufacturing $0.50
Variable selling .30
Variable G & A .15
Total variable costs (unit) $0.95