Hamlet Industries is organized into two divisions, Fabrication and Finishing. Both divisions are considered to be profit centers, and thetwo division managers are evaluated in large part on divisional income. The company makes a single product. It is manufactured inFabrication and then packaged and sold in Distribution. There is no intermediate market for the product.The monthly income statements, in thousands of dollars, for the two divisions follow. Production and sales amounted to 34,800 units.RevenuesVariable costsContribution marginFixed costsDivisional profitAssume there is no special order pending.Required:a. What transfer price would you recommend for Hamlet Industries?b. Using your recommended transfer price, what will be the income of the two divisions, assuming monthly production and sales of34,800 units?to searchc. The manager of the Fabrication Division complains about the transfer price, saying that division profits are unfairly low. The twodivision managers meet and negotiate a transfer price of $148. What will be the income of the two divisions, assuming monthlyproduction and sales of 34,800 units.4Complete this question by entering your answers in the tabs below.RRequired A Required B Required CWhat transfer price would you recommend for Hamlet Industries?F%Fabrication($000)$5,2204,176$1,044800$2445TGB6Distribution($000)$8,7006,438$2,2621,462$ 800HN&7tyl8< PrevMLOPaK5 of 69O WF11)OLNext >888F12PHome{[End-1157°F Mostly cloudyInsert]DeBas

Contribution Margin - A gross or per-unit basis might be used to express the contribution margin. It…

Hamlet Industries is organized into two divisions, Fabrication and Finishing. Both divisions are considered to be profit centers, and the two division managers are evaluated in large part on divisional income. The company makes a single product. It is manufactured in Fabrication and then packaged and sold in Distribution. There is no intermediate market for the product. The monthly income statements, in thousands of dollars, for the two divisions follow. Production and sales amounted to 34,800 units. Fabrication ($000) $5,220 4,176 $1,044 800 $244 Revenues Variable costs Contribution margin Fixed costs Divisional profit Assume there is no special order pending. Required: Distribution ($000) $8,700 6,438 $2,262 1,462 $800

Hamlet Industries is organized into two divisions, Fabrication and Finishing. Both divisions are considered to be profit centers, and the two division managers are evaluated in large part on divisional income. The company makes a single product. It is manufactured in Fabrication and then packaged and sold in Distribution. There is no intermediate market for the product. The monthly income statements, in thousands of dollars, for the two divisions follow. Production and sales amounted to 34,800 units. Fabrication ($000) $5,220 4,176 $1,044 800 $244 Revenues Variable costs Contribution margin Fixed costs Divisional profit Assume there is no special order pending. Required: Distribution ($000) $8,700 6,438 $2,262 1,462 $800

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter24: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 8E: Rocky Mountain Airlines Inc. has two divisions organized as profit centers, the Passenger Division...

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Hamlet Industries is organized into two divisions, Fabrication and Finishing. Both divisions are considered to be profit centers, and the two division managers are evaluated in large part on divisional income. The company makes a single product. It is manufactured in Fabrication and then packaged and sold in Distribution. There is no intermediate market for the product. The monthly income statements, in thousands of dollars, for the two divisions follow. Production and sales amounted to 32,000 units. Fabrication ($000) Distribution ($000) Revenues $ 4,800 $ 8,000 Variable costs 3,840 5,920 Contribution margin $ 960 $ 2,080 Fixed costs 800 1,280 Divisional profit $ 160 $ 800 The company has just received an offer to buy 3,200 units of the product this month at a price of $200 per unit. The Distribution Division manager suggests that for the special order only, the transfer price be set at 50 percent of the sales price, or $100 per unit. Required: What is the…
Hamlet Industries is organized into two divisions, Fabrication and Finishing. Both divisions are considered to be profit centers, and the two division managers are evaluated in large part on divisional income. The company makes a single product. It is manufactured in Fabrication and then packaged and sold in Distribution. There is no intermediate market for the product. The monthly income statements, in thousands of dollars, for the two divisions follow. Production and sales amounted to 32,000 units. Fabrication ($000) $ 4,800 3,840 Distribution ($000) $ 8,000 5,920 $ 2,080 1,280 $ 960 800 $ 160 $ 800 Revenues Variable costs Contribution margin Fixed costs Divisional profit Assume there is no special order pending. Required: a. What transfer price would you recommend for Hamlet Industries? b. Using your recommended transfer price, what will be the income of the two divisions, assuming monthly production and sales of 32,000 units? c. The manager of the Fabrication Division complains…
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