Division X makes a part with the following characteristics: Production capacity 25,000 units $ 18 :37 Selling price to outside customers. Variable cost per unit Fixed costs, total $ 11 $ 100,000 Division Y of the same company would like to purchase 10,000 units each period from Division X. Division Y now purchases the part at a price of $17 each. Suppose Division X has sufficient excess capacity to handle all of Division Y's needs without any increase in fi: cutting into sales to outside customers. If Division X refuses to accept the $17 price internally and Division Y continues to buy from th company as a whole will be: Multiple Choice О worse off by $70,000 each period. О better off by $10,000 each period. О worse off by $60,000 each period. О worse off by $20,000 each period.

Division X makes a part with the following characteristics: Production capacity 25,000 units $ 18 :37 Selling price to outside customers. Variable cost per unit Fixed costs, total $ 11 $ 100,000 Division Y of the same company would like to purchase 10,000 units each period from Division X. Division Y now purchases the part at a price of $17 each. Suppose Division X has sufficient excess capacity to handle all of Division Y's needs without any increase in fi: cutting into sales to outside customers. If Division X refuses to accept the $17 price internally and Division Y continues to buy from th company as a whole will be: Multiple Choice О worse off by $70,000 each period. О better off by $10,000 each period. О worse off by $60,000 each period. О worse off by $20,000 each period.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6PA: Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit...

See similar textbooks

Similar questions

Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000
Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit variable cost for the three products are as follows: Their sales mix s reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $25,000 per year. What are total variable costs for Morris with their current product mix? Calculate the number of units of each product that will need to be sold in order for Morris to break even. What is their break-even point in sales dollars? Using an income statement format, prove that this is the break-even point.
Division X makes a part with the following characteristics: Production capacity.. 25,000 units $18 Selling price to outside customers. Variable cost per unit. $11 Fixed cost, total. $100,000 Division Y of the same company would like to purchase 10,000 units each period from Division X. Division Y now purchases the part from an outside supplier at a price of $17 each. Suppose that Division X is operating at capacity and can sell all of its output to outside customers. If Division X sells the parts to Division Y at $17 per unit, the company as a whole will be: Select one: a. better off by $10,000 each period. b. worse off by $20,000 each period. C. worse off by $10,000 each period. d. There will be no change in the status of the company as a whole.
Division X makes a part with the following characteristics: Production capacity 25,000 units Selling price to outside customers $18 Variable cost per unit $11 Fixed costs, total $100,000 Division Y of the same company would like to purchase 10,000 units each period from Division X. Division Y now purchases the part from an outside supplier at a price of $17 each. Suppose Division X has sufficient excess capacity to handle all of Division Y's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division X refuses to accept the $17 price internally and Division Y continues to buy from the outside supplier, the company as a whole will be: better off by $60,000 each period. O worse off by $60,000 each period. worse off by $70,000 each period. better off by $10,000 each period. worse off by $20,000 each period. O O O O <
Division A of Huskie, Inc. has operating data as follows: Capacity Selling price Variable costs Fixed costs A. B. Division B wants to purchase units from Division A. If Division A agrees to sell units to Division B, A's variable costs will be $5 less per unit. C. If Division A has capacity available to meet B's requirements, what is the minimum price it should charge? $40 $30 20,000 units $75 $80 per unit D. $60 $35 per unit $20 per unit
Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $14. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the cost plus assuming 22% transfer price? • Variable cost per unit $7.27 Fixed cost per unit 1.93 • Division B sales price of Component X 14.50
The Selling Division’s unit sales price is P20 and its unit variable cost is P10. Its capacity is 10,000 units. Fixed costs per unit are P4. Current outside sales is 7,500 units. What is the maximum transfer price that the Purchasing Division would be willing to accept if 4,000 units will be sold to the Purchasing Division? Assume that the Purchasing Division can buy the same from outside market at P18.50 and that a cost of P1 per unit will be saved from the transfer. _____________________5. The Selling Division’s unit sales price is P20 and its unit variable cost is P10. Its capacity is 10,000 units. Fixed costs per unit are P4. Current outside sales is 10,000 units. What is the maximum transfer price that the Purchasing Division would be willing to accept if 4,000 units will be sold to the Purchasing Division? Assume that the Purchasing Division can buy the same from outside market at P18.50. _____________________6. The Selling Division’s unit sales price is P19 and its unit variable…
Sandpiper Inc. has a division that manufactures a component that sells for $165 and has a variable cost of $45. Another division of the company wants to purchase the component Fixed cost per unit of the component is $20. What is the minimum transfer price if the division is operating at capacity? OA. $165 OB. $45 OC. $20 OD. $65
Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $14. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the full-cost plus assuming 15% transfer price? Variable cost per unit $7.16 Fixed cost per unit 1.14 Division B sales price of Component X 14.5
Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $12. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the full-cost-based transfer price? • Variable cost per unit $6.69 Fixed cost per unit 1.47 . Division B sales price of Component X 14,50
The following information is available for Division X of Meisels, Inc.: Fixed cost per unit (based on capacity) Variable cost per unit Capacity in units Selling price to outside customers $5.25 $32 24,000 $41 Division Y would like to purchase 6,000 units each year from Division X. Division X has enough excess capacity to handle all of Division Y's needs. Division Y now purchases from an outside supplier at a price of $39 and insists that it should be charged that same price by Division X. If Division X refuses to accept the $39 price for transfers to Division Y, what effect would this have on the total annual profit of Meisels, Inc.?
1. The Selling Division’s unit sales price is P20 and its unit variable cost is P8. Its capacity is 10,000 units. Fixed costs per unit are P4. Current outside sales is 10,000 units. What is the minimum transfer price that the Selling Division would be willing to accept if 3,000 units will be sold to the Purchasing Division? Assume that the Purchasing Division can buy the same from outside market at P18.50. _____________________2. The Selling Division’s unit sales price is P20 and its unit variable cost is P8. Its capacity is 10,000 units. Fixed costs per unit are P4. Current outside sales are 7,000 units. What is the Selling Division’s opportunity cost per unit from selling 3,000 units to the Purchasing Division? Assume that the Purchasing Division can buy the same from outside market at P18.50 ______________________3. The Selling Division’s unit sales price is P20 and its unit variable cost is P8. Its capacity is 10,000 units. Fixed costs per unit are P4. Current outside sales is…