Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching Division and the Polishing Division. The Stitching Division manufactures shoes for the Polishing Division, which completes the shoes and sells them to retailers. The Stitching Division "sells" shoes to the Polishing Division. The market price for the Polishing Division to purchase a pair of shoes is $42.00.(Ignore changes in inventory.) The fixed costs for the Stitching Division are assumed to be the same over the range of 40,000−101,000 units. The fixed costs for the Polishing Division are assumed to be $19.00 per pair at 101,000 units. Stitching's costs per pair of shoes are: Direct materials $15.00 Direct labor $13.00 Variable overhead $11.00 Division fixed costs $9.00 Polishing's costs per completed pair of shoes are:
Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching Division and the Polishing Division. The Stitching Division manufactures shoes for the Polishing Division, which completes the shoes and sells them to retailers. The Stitching Division "sells" shoes to the Polishing Division. The market price for the Polishing Division to purchase a pair of shoes is $42.00.(Ignore changes in inventory.) The fixed costs for the Stitching Division are assumed to be the same over the range of 40,000−101,000 units. The fixed costs for the Polishing Division are assumed to be $19.00 per pair at 101,000 units. Stitching's costs per pair of shoes are: Direct materials $15.00 Direct labor $13.00 Variable overhead $11.00 Division fixed costs $9.00 Polishing's costs per completed pair of shoes are:
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 14E: Many different businesses employ markup on cost to arrive at a price. For each of the following...
Related questions
Question
Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching Division and the Polishing Division. The Stitching Division manufactures shoes for the Polishing Division, which completes the shoes and sells them to retailers. The Stitching Division "sells" shoes to the Polishing Division. The market price for the Polishing Division to purchase a pair of shoes is $42.00.(Ignore changes in inventory.) The fixed costs for the Stitching Division are assumed to be the same over the range of 40,000−101,000
units. The fixed costs for the Polishing Division are assumed to be $19.00
per pair at 101,000 units.
units. The fixed costs for the Polishing Division are assumed to be $19.00
per pair at 101,000 units.
Stitching's costs per pair of shoes are:
Direct materials $15.00
Direct labor $13.00
Variable overhead $11.00
Division fixed costs $9.00
Polishing's costs per completed pair of shoes are:
Direct materials $16.00
Direct labor $10.00
Variable overhead $7.00
Division fixed costs $18.00
What is the
market−based
transfer price per pair of shoes from the Stitching Division to the Polishing Division?$35.00
$44.00
$57.00
$42.00
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning