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    The Black Division produces markers with a direct material cost of $60, direct labor cost of $25, and period costs of $15 per unit. It sells each marker for $120 and produces at full capacity of 100,000 units per year. The minimum selling price to break even is $100 per unit. The maximum transfer price is $100 per unit. Notre Company transfers a product between divisions. The actual variable cost was $50 per unit, twice the budgeted output, and fixed costs were as budgeted. The actual cost per unit is $50. The transfer price based on 130% of actual variable cost is $65 per unit. The transfer price based on budgeted full cost plus 30%

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    The Black Division produces markers with a direct material cost of $60, direct labor cost of $25, and period costs of $15 per unit. It sells each marker for $120 and produces at full capacity of 100,000 units per year. The minimum selling price to break even is $100 per unit. The maximum transfer price is $100 per unit. Notre Company transfers a product between divisions. The actual variable cost was $50 per unit, twice the budgeted output, and fixed costs were as budgeted. The actual cost per unit is $50. The transfer price based on 130% of actual variable cost is $65 per unit. The transfer price based on budgeted full cost plus 30%

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    2 views1 page

    3

    Uploaded by

    Heaven Heart
    The Black Division produces markers with a direct material cost of $60, direct labor cost of $25, and period costs of $15 per unit. It sells each marker for $120 and produces at full capacity of 100,000 units per year. The minimum selling price to break even is $100 per unit. The maximum transfer price is $100 per unit. Notre Company transfers a product between divisions. The actual variable cost was $50 per unit, twice the budgeted output, and fixed costs were as budgeted. The actual cost per unit is $50. The transfer price based on 130% of actual variable cost is $65 per unit. The transfer price based on budgeted full cost plus 30%

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    © All Rights Reserved
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    The Black Division of Pluma Company produces a high quality marker.

    Unit production costs (based on


    capacity production of 100000 units per year) follow:

    Direct material 60

    Direct labor 25

    Period Cost 15

    Selling Price 120

    The Black Division is producing and selling at capacity.

    What is the minimum selling price?

    What is the maximum transfer price?

    Notre Company transfers a product from Division N to Division R. Variable cost of this product is
    anticipated to be P40 per unit an total fixed cost amount P8000. A total of 100 units are anticipated to
    be produced. Actual cost, however, amounts to P50 for variable cost. Fixed costs expected to continue
    as budgeted. However, the actual output is twice as the number of budgeted.

    Actual cost per unit amount to?

    The transfer price based on actual variable cost plus 130% markup amounts to?

    The transfer price based on budgeted full cost plus 30% markup amounts to?

    Bearing Division of Phantom Corp. sells 80000 units of Part X to the outside market. Part X sells for P10
    and has a variable cost of 5.50 and a fixed cost per unit of 2.50 Bearing has a capacity to produce 100000
    units of Part X per period. Motor Division currently purchases 10000 units of Part X from Bearing for
    P10. Motor has been approached by an outside supplier that it is willing to supply the parts for 9.

    What is the effect on Phantom’s overall profit if Bearing refuses the outside price and Motor Division
    decides to buy outside?

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