Question

# 1. Spring 20 Company has two divisions. Division A manufactures a part that sells for \$90...

1. Spring 20 Company has two divisions. Division A manufactures a part that sells for \$90 with a variable cost of \$40. Fixed cost per unit of the part is \$20. Division B wants to purchase the part from Division A.  What is the minimum transfer price if Division A is operating at capacity?

2.

Spring 20 Company manufactures lamps. The company expects to sell 2,000 lamps for \$100 each in April and 2,400 lamps for \$110 each in May. Sales are 15% cash and 85% on account. Compute the total budgeted sales for May. You must show your work for credit.

3.

Use the following to calculate the Direct Materials Cost Standard per square foot:

Direct materials cost from the supplier are \$12 per square foot, net of purchase discount. Sales taxes amount to \$1.00 per square foot. Freight-in amounts to \$2.00 per square foot.

 1 Calculation of Minimum Transfer Price Variable Cost 40 Contribution lost 50 Transfer Price 90 As the company is operating at full capacity minimum t/f price will include contribution margin. 2 Total Budgeted Sales for May 2400*110 264000 3 Direct material cost Cost from Supplier 12 Freight 2 Material Cost 14 Sales tax expenses are not to be included in material cost

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