HomeworkLib
Question

Part 43X costs the Southern Division of Norris Corporation $36 to produce. Making up that cost...

Part 43X costs the Southern Division of Norris Corporation $36 to produce. Making up that cost are direct materials of $15, direct labor of $7, variable manufacturing overhead of $12, and fixed manufacturing overhead of $2. Southern Division sells Part 43X to other companies for $26. 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?

Multiple Choice

  • $26.

  • $36.

  • $34.

  • $24.

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

For any transferring division minimum transfer price would be its variable costs since if it recover variable costs then it enter into the contribution margin area then after if it recovers fixed costs automatically it will earn profit .

Variable cost per unit :

Direct material -$15

Direct labour -$7

Variable manufacturing overhead -$12

Total variable cost per unit =$34

Option -3

0 0
Add a comment
Know the answer?
Add Answer to:
Part 43X costs the Southern Division of Norris Corporation $36 to produce. Making up that cost...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • The Southern Division of Barstol Company makes and sells a single product, which is a part...

    The Southern Division of Barstol Company makes and sells a single product, which is a part used in manufacturing trucks. The annual production capacity is 39,000 units and the variable cost of each unit is $50. Presently the Southern Division sells 34,000 units per year to outside customers at $60 per unit. The Northern Division of Barstol Company would like to buy 20,000 units a year from Southern to use in its production. There would be no savings in variable...

  • The Southern Division of Barstol Company makes and sells a single product, which is a part...

    The Southern Division of Barstol Company makes and sells a single product, which is a part used in manufacturing trucks. The annual production capacity is 39,000 units and the variable cost of each unit is $50. Presently the Southern Division sells 34,000 units per year to outside customers at $60 per unit. The Northern Division of Barstol Company would like to buy 20,000 units a year from Southern to use in its production. There would be no savings in variable...

  • Question 29 Arian International Corporation has two divisions, Division A and Division B. Division A produces...

    Question 29 Arian International Corporation has two divisions, Division A and Division B. Division A produces a motor that sells for $87 per unit, with the following costs based on its capacity of 185,000 units: Direct materials Direct labour Variable overhead Fixed overhead $32 26 10 Division A is operating at 70% of normal capacity and Division B is purchasing 20,000 units of the same component from an outside supplier for $81 per unit. Calculate the benefit, if any, to...

  • The Southern Division of Barstol Company makes and sells a single product, which is a part...

    The Southern Division of Barstol Company makes and sells a single product, which is a part used in manufacturing trucks. The annual production capacity is 32,000 units and the variable cost of each unit is $37. Presently the Southern Division sells 27,000 units per year to outside customers at $49 per unit. The Northern Division of Barstol Company would like to buy 16,000 units a year from Southern to use in its production. There would be no savings in variable...

  • Buzz’s Florida Division is currently purchasing a part from an outside supplier. The company's Georgia Division,...

    Buzz’s Florida Division is currently purchasing a part from an outside supplier. The company's Georgia Division, which has excess capacity, makes and sells this part for external customers at a variable cost of $18 and a selling price of $30. If Georgia begins sales to Florida, it (1) will use the general transfer-pricing rule and (2) will be able to reduce variable cost on internal transfers by $4. If sales to outsiders will not be affected, Georgia would establish a...

  • 1.Using the information below, compute the cycle efficiency: Process time 6.0 hours Inspections time .5 hours...

    1.Using the information below, compute the cycle efficiency: Process time 6.0 hours Inspections time .5 hours Move time .6 hours Wait time .9 hours Warehouse storage time 72.0 hours Multiple Choice 93.8%. 81.3%. 100.0%. 75.0%. 88.8%. 2. 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: Multiple Choice variable cost of producing a...

  • Division A makes a part that it sells to customers outside of the company. Data concerning...

    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 $ 94 Variable cost per unit $ 60 Total fixed costs $ 704,000 Capacity in units 44,000 Division B of the same company would like to use the part manufactured by Division A in one of its products. Division B currently purchases a similar part made by an outside company for $87 per unit and...

  • ABC Corporation produce a part B that is used in the manufacture of one of its...

    ABC Corporation produce a part B that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows: Direct materials Direct labor Variable overhead Fixed overhead Total manufacturing Cost $40,000 60,000 30,000 80,000 $210,000 Another small local manufacturer has offered to sell the same part (10,000 units) to ABC Company for $20 each. If ABC makes the part, the costs of direct material will increase by...

  • Element Corporation has 2 divisions: The Cushion Division and the Chair Division. You are the Vice...

    Element Corporation has 2 divisions: The Cushion Division and the Chair Division. You are the Vice President in charge of the Cushion Division. Your Cushion Division is a profit center. Each division has its own markets; that is, your Cushion Division sells cushions on the open market to outside customers at a price of $150 per cushion. The Chair Division makes chairs, and in connection with that, buys slightly cheaper quality cushions on the open market for $118 each. You...

  • BE21.2 (LO 2) Mussatto Corporation produces snowboards. The following per unit cost information is available: direct...

    BE21.2 (LO 2) Mussatto Corporation produces snowboards. The following per unit cost information is available: direct materials $12, direct labor $8, variable manufacturing overhead $6, fixed manufactur- ing overhead $14, variable selling and administrative expenses $4, and fixed selling and administrative expenses $12. Using a 30% markup percentage on total per unit cost, compute the target selling price. BE21.4 (LO 2) Morales Corporation produces microwave ovens. The following per unit cost informa- tion is available: direct materials $36, direct labor...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT