Centurion Inc. manufactures lighting equipment. It consists of several operating divisions within its business. Division A has decided to go outside the company to purchase materials since Division B plans to increase its selling price for the same materials to $200. Information for Division A and Division B is given in the following table. Outside price for materials Division A's annual purchases Division B's variable costs per unit Division B's fixed costs, per unit Division B's capacity utilisation Task: $150 10,000 units $140 $1,250,000 100% 1. Will the company benefit, if division A purchases outside the company? Assume that division B cannot sell its materials to outside buyers. 2. Assume that division B can save $200,000 in fixed costs if it does not manufacture the material for division A. Should division A purchase from the outside market? 3. Assume the situation in task 1. If the outside market value for the materials drops $20, should division A buy from the outside? Explain.
Q: Prepare the necessary correcting entries during the current year, assuming that Swifty uses a…
A: Correcting journal entries rectify errors in previously recorded financial transactions. They ensure…
Q: The total assets and total liabilities (in millions) of ThriftShop, Inc. and Bullseye Corporation…
A: Shareholders' equity represents the residual interest in a company's assets after deducting…
Q: Management of Mittel Company wants to reduce the elapsed time from when a customer places an order…
A: Value added time is the time required on activities which will directly contribute to get value…
Q: Volata Company began operations on January 1, 2019. In the second quarter of 2020, it adopted the…
A: Inventory valuationInventory valuation method is an accounting practice that is followed by each and…
Q: Problem 9-5A (Algo) Part 2 2. If the market interest rate is 7%, the bonds will issue at $357,290.…
A: The bond is a type of financial instrument issued by companies or governments in order to raise…
Q: Project Y requires a $333,000 investment for new machinery with a six-year life and no salvage…
A: The payback period is the time to recover the cost of the investment.
Q: In response to intense foreign competition, Florex Company has taken steps to improve the quality of…
A: QUALITY COST REPORTA quality cost report is a report that provides detailed information about the…
Q: a. Prepare all the double entry(T-Account) for the above transactions. b. Balance off the accounts…
A: Double entry T accounts constitute a foundational element of accounting, portraying transactions…
Q: Lambert invests $20,000 for a 1/3 interest in a partnership in which the other partners have capital…
A: The objective of the question is to determine the capital of Lambert after his admission into the…
Q: Prepare a statement of financial position in good form. (List Current Assets in order of liquidity.…
A: It is a statement which represents the asset, liabilities and equity of the company.It is also known…
Q: Xavier and Yolanda have original investments of $50,000 and $100,000, respectively, in a…
A: In an partnership firm, the share of loss refers to the portion of the total losses incurred by the…
Q: On January 1, 2025, Indigo Company purchased 12% bonds having a maturity value of $310,000 for…
A: Unrealized gain means the value rise in asset value that has not yet been realized through sale or…
Q: Comprehensive Problem One Noah and Joan Arc’s Tax Return Noah and Joan Arc live with their family in…
A: The objective of this question is to prepare the federal income tax return for Noah and Joan Arc…
Q: When the asset revaluation account is used to revalue assets prior to admitting a new partner, Asset…
A: The objective of the question is to understand the accounting treatment of asset revaluation,…
Q: Which of the following medical expenses are likely deductible assuming the 7.5%-of-AGI threshold is…
A: The objective of the question is to determine which of the given medical expenses are likely…
Q: T. Thomas withdraws
A: A partnership is a kind of business where a formal agreement between two or more people is made who…
Q: McK Nursery, Incorporated, reports the following account balances on December 31, 2024: cash,…
A: Balance Sheet is a financial statement that includes assets, liabilities and stockholder's…
Q: rward contract is not designated as a hedge. Relevant exchange rates for the
A: Exchange rate gain /loss is the profit or loss that happens due to change in exchange rate between…
Q: 1 2 6 Actual 7 Direct labor: 8 Standard Standards for one of Patterson, Incorporated's products is…
A: Variance analysis : Analysis of differences between planned and actual behavior. After analyzing…
Q: Required: 1. Prepare a vertical analysis of the balance sheet data for 2025 and 2024. Express each…
A: Vertical analysis and horizontal analysis are two methods used in financial statement analysis to…
Q: Adding Company applies overhead costs to products based on a pre-determined overhead rate of 80% of…
A: Cost of goods manufactured :— It is the total cost of completed finished goods transferred from work…
Q: Vaughan company estimates that unit sales will be 10,500 in quarter 1; 11,400 in quarter 2; 13,400…
A: Lets understand the basics.Management prepares budget in order to estimate future profit and…
Q: Anthony's Athletic Apparel has 1,200 shares of 7%, $100 par value preferred stock the company issued…
A: Annual Dividend to Preferred shareholders = Number of preferred share outstanding x Par value per…
Q: 9. If you are leaving your job and the situation is unfavorable, it is acceptable to: A. None of…
A: The objective of these questions is to understand the best practices and professional behavior in a…
Q: ! Required information CP9-1 (Algo) Computing Acquisition Cost and Recording Depreciation under…
A: Depreciation Expense -Depreciation Expenses are the expense incurred on the wear and tear of the…
Q: On January 1, 2024, the Excel Delivery Company purchased a delivery van for $34,950. At the end of…
A: Depreciation expense is an accounting method used to allocate the cost of a tangible or physical…
Q: The following data were collected by Pete Inc. for the month of May: Static budget data: Sales…
A: Budgeting: It is a process of planning the work to be performed. Under this process a formal plan is…
Q: needed 527,000 0 470,000 0 41
A: A purchase budget shows the value of goods a company must purchase to achieve its sale revenue.
Q: Ruiz Company provides the following unit sales forecast for the next three months: January February…
A: Lets understand the basics.Management prepares budget in order to estimate future profit and…
Q: Inventory Costing Methods and the Perpetual Method Kay & Company experienced the following events in…
A: The inventory can be valued using different methods as FIFO, LIFO and average method, Using average…
Q: Cedar Company reports the following operating results for the month of June: Sales (5,000 units at…
A: MARGINAL COSTING INCOME STATEMENTMarginal Costing Income Statement is One of the Important Cost…
Q: Pina Colada Corp. reported net income of $190,400 for 2022. Pina Colada also reported depreciation…
A: Cash flow statement :— It is one of the financial statements that shows change in cash and cash…
Q: Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small.…
A: MARGINAL COSTING INCOME STATEMENTMarginal Costing Income Statement is One of the Important Cost…
Q: A company's fixed budget (based on 8,000 units) follows. Compute total fixed costs. Fixed Budget…
A: FLEXIBLE BUDGETA flexible budget is a budget that is prepared for different levels of activity or…
Q: You are getting ready to prepare a 2022 tax return for your clients Moose and Suzie Okie and are…
A: The objective of this question is to calculate the total reportable income for Moose and Suzie Okie…
Q: Date Sept. 4 8 20 Item Beginning inventory Purchase Sale Purchase Units 5 8 6 15 Cost Total $10 $50…
A: FIFO means First In First Out.Under FIFO method materials received first in the stores are issued…
Q: les et operating income erage operating assets Division Osaka $ 10,600,000 $ 742,000 $ 2,650,000…
A: Operational assets: These are the resources that the company uses to run its operations and bring in…
Q: Inventory Costing Methods and the Periodic Method Kay & Company experienced the following events in…
A: The inventory can be valued using different methods as FIFO, LIFO and average method. Using average…
Q: The fixed budget for 21,500 units of production shows sales of $559,000; variable costs of $64,500;…
A: Lets understand the basics.Management prepares budget in order to estimate future profit and loss…
Q: Sunshine Clothing Company issues 1,000 shares of $1 par value common stock at $33 per share. Later…
A: Treasury Stock is a common stock repurchased by a company from the market. It could be reissued or…
Q: Last summer, Casey r
A: Federal law requires U.S. tax residents and U.S. citizens to report any worldwide income, including…
Q: Marquette Innovations Corp. is considering investing in new excavation equipment for their mining…
A: Net Present Value: Net present value (NPV) is the difference between present value of the cash…
Q: On January 1, 2019, MLW Company purchased a copyright for $1,000,000, having an estimated useful…
A: The objective of this question is to calculate the amount of copyright amortization expense for the…
Q: West, Inc., acquired 60% of East Co.'s outstanding common stock. West paid $800,000 to acquire the…
A: Acquisition cost, also known as the cost of acquisition, is the total cost incurred to acquire an…
Q: Apple Inc. (AAPL) designs, manufactures, and markets personal computers and related software. Apple…
A: Fixed assets include property, plant, and equipment (PP&E) and are recorded on the balance…
Q: 323,000 shares of $1 par value common stock et income for 2025 was $2,579,000. No cash dividends…
A: Basic earnings per share :- Basic earnings per share is the amount of a company's profit that can be…
Q: Virtual Co. incurred research and development costs in 2023 as follows: Materials used in…
A: The objective of the question is to determine the amount of research and development costs that…
Q: On January 1, Ivanhoe Corporation had 62,400 shares of no-par common stock issued and outstanding.…
A: The accounting equation states that assets are equal to the sum of the liabilities and equity. The…
Q: Compute payroll An employee earns $36 per hour and 1.5 times that rate for all hours in excess of 40…
A: Lets understand the basics.Gross pay for an employee means a pay which is totalling normal pay plus…
Q: Virtual Co. incurred research and development costs in 2023 as follows: Materials used in research…
A: R&D should either to be reported separately on the income statement or disclosed in the…
4
Step by step
Solved in 3 steps
- Morrill Company produces two different types of gauges: a density gauge and a thickness gauge. The segmented income statement for a typical quarter follows. Includes depreciation. The density gauge uses a subassembly that is purchased from an external supplier for 25 per unit. Each quarter, 2,000 subassemblies are purchased. All units produced are sold, and there are no ending inventories of subassemblies. Morrill is considering making the subassembly rather than buying it. Unit-level variable manufacturing costs are as follows: No significant non-unit-level costs are incurred. Morrill is considering two alternatives to supply the productive capacity for the subassembly. 1. Lease the needed space and equipment at a cost of 27,000 per quarter for the space and 10,000 per quarter for a supervisor. There are no other fixed expenses. 2. Drop the thickness gauge. The equipment could be adapted with virtually no cost and the existing space utilized to produce the subassembly. The direct fixed expenses, including supervision, would be 38,000, 8,000 of which is depreciation on equipment. If the thickness gauge is dropped, sales of the density gauge will not be affected. Required: 1. Should Morrill Company make or buy the subassembly? If it makes the subassembly, which alternative should be chosen? Explain and provide supporting computations. 2. Suppose that dropping the thickness gauge will decrease sales of the density gauge by 10 percent. What effect does this have on the decision? 3. Assume that dropping the thickness gauge decreases sales of the density gauge by 10 percent and that 2,800 subassemblies are required per quarter. As before, assume that there are no ending inventories of subassemblies and that all units produced are sold. Assume also that the per-unit sales price and variable costs are the same as in Requirement 1. Include the leasing alternative in your consideration. Now, what is the correct decision?Roper Furniture manufactures office furniture and tracks cost data across their process. The following are some of the costs that they incur. Classify these costs as fixed or variable costs, and as product costs or period costs. Wood used to produce desks ($125,00 per desk) Production labor used to produce desks ($15 per hour) Production supervisor salary ($45,000 per year) Depreciation on factory equipment ($60,000 per year) Selling and administrative expenses ($45,000 per year) Rent on corporate office ($44,000 per year) Nails, glue, and other materials required to produce desks (varies per desk) Utilities expenses for production facility Sales staff commission (5% of gross sales)Division A makes a part that it sells to customers outside of the company. Data concerning this part appear below: Selling price to outside customers Variable cost per unit Total fixed costs Capacity in (units) Division B of the same company would like to use the part manufactured by Division A in one of its products. Division B currently purchases a similar part made by an outside company for $74 per unit and would substitute the part made by Division A. Division B requires 5,200 units of the part each period. Division A can already sell all of the units it can produce on the outside market. What should be the lowest acceptable transfer price from the perspective of Division A? e to search Multiple Choice $71 $77 4 $ 77 $ 55 $ 432,000 27,000 O Ai 21. 37°F Cloudy ^4.
- AZChen Company manufactures one particular type of washing machine and has two divisions, the Compressor Division, and the Fabrication Division. The Compressor Division manufactures compressors for the Fabrication Division, which completes the washing machine and sells it to retailers. The Compressor Division "sells" compressors to the Fabrication Division. The market price for the Fabrication Division to purchase a compressor is $40.00. (Ignore changes in inventory.) The fixed costs for the Compressor and Fabrication Divisions are assumed to be the same over the range of 1,000 - 5,000 units. Compressor's costs per compressor are: Direct materials $15 Direct labour $7.30 Variable overhead $2.69 Division fixed costs $7.48 Fabrication's costs per completed washing machine are: Direct materials $140.00 (excluding the transfer price of the compressor) Direct labour $57.50 Variable overhead $23.00 Division fixed costs $8.00 Assume the transfer price for a compressor is 149% of total costs…The AB division sells goods internally to the CD division of the same company. The quoted external price in industry publications from a supplier near AB is P200 per ton plus transportation. It costs P20 per ton to transport the goods to CD. AB’s actual market cost per ton to buy the direct materials to make the transferred product is P100. Actual per ton direct labor is P50. Other actual costs of storage and handling are P40. The company president selects a P220 transfer price. This is an example of: Cost-based transfer pricing. Cost plus 20% transfer pricing. Market-based transfer pricing. Negotiated transfer pricing.Shalom Department makes a part that it sells to customers outside of the company. Data concerning this part appear below: Selling price to outsiders Variable cost per unit Total fixed costs Capacity in units Peace Department of the same company would like to use the part manufactured by Shalom Department in one of its products. Peace Department currently purchases a similar part made by an outside company for P70 per unit and would substitute the part made by Shalom Department. Peace Department requires 5,000 units of the part each period. Shalom Department has ample excess capacity to handle all of Peace Department's needs without any increase in fixed costs and without cutting into outside sales of the part. What is the lowest acceptable transfer price from the standpoint of the selling division? 75 55 400,000 25,000
- XYZ Co has two divisions, X and Y. Division X makes a component for washing machines which it can only sell to Division Y. It has no other outlet for sales. Current information relating to Division X is as follows: Marginal cost per unit $1000 Transfer price of the component $1650 Total production and sales of the component each year 2,200 units Specific fixed costs of Division X per year $100,000 ABC has offered to sell the component to Division Y for $1400 per unit. If Division Y accepts this offer, Division X will be closed. 1. What is the minimum and maximum transfer price? 2. What will happen to XYZ’s profits if Division Y accepts the supplier’s offer and Division X is closed? 3. Assuming if Division Y buys from the outside supplier the facilities currently used to produce the component can be used to produce another product which will result in a contribution margin of $75,000. Division X cannot manufacture the component and produce the other product at the same…Division A makes a part that it sells to customers outside of the company. Data concerning this part appear below: Selling price to outside customers $ 75 Variable cost per unit $ 50 Total fixed costs $ 400,000 Capacity in (units) 25,000 Division B of the same company would like to use the part manufactured by Division A in one of its products. Division B currently purchases a similar part made by an outside company for $70 per unit and would substitute the part made by Division A. Division B requires 5,000 units of the part each period. Division A can already sell all of the units it can produce on the outside market. What should be the lowest acceptable transfer price from the perspective of Division A? Multiple Choice $75. $66. $50. $16.Division A of SLG Company produces a part it sells to other companies. Sales and cost data for the part are as follows: Capacity in units 60,000 units Selling price per unit O $27 per unit O $39 per unit O $36 per unit O $41 per unit Variable cost per unit O None of the above. Fixed cost per unit at capacity Division B, another division of SLG Company, would like to buy this part from Division A. Division B is currently purchasing the part from an outside source at $38 per unit. If Division A sells to Division B, then $1 in Division A's variable costs can be avoided. Assume Division A has enough idle capacity to handle all of Division B's needs without any increase in fixed costs and without interfering with outside sales. According to the transfer pricing guidelines, what is the lowest acceptable transfer price from the perspective of Division A? $40 per unit $28 per unit $9 per unit
- ractor Division makes a part that it sells to customers outside of the company. Data concerning this part appear below: Selling price to outside customers $ 38 Variable cost per unit $ 26 Total fixed costs $ 402,000 Capacity in units 30,500 Assembly Division of the same company would like to use the part manufactured by Tractor Division in one of its products. Assembly Division currently purchases a similar part made by an outside company for $37 per unit and would substitute the part made by Tractor Division. Assembly Division requires 5,020 units of the part each period. Tractor Division has ample excess capacity to handle all of Assembly Division’s needs without any increase in fixed costs and without cutting into outside sales. What is the lowest acceptable transfer price from the standpoint of the selling division? Multiple Choice $34 $38 $26 $37Plish Company manufactures only one type of washing machine and has two divisions, the Compressor Division, and the Fabrication Division. The Compressor Division manufactures compressors for the Fabrication Division, which completes the washing machine and sells it to retailers. The Compressor Division "sells" compressors to the Fabrication Division. The market price for the Fabrication Division to purchase a compressor is $40.00. (Ignore changes in inventory.) The fixed costs for the Compressor Division are assumed to be the same over the range of 5,000-10,000 units. The fixed costs for the Fabrication Division are assumed to be $7.50 per unit at 10,000 units. Compressor's costs per compressor are: Direct materials $15.00 Direct labor $7.25 Variable overhead $3.00 Division fixed costs $7.50 Fabrication's costs per completed air conditioner are: Direct…Truball Inc., which manufactures sports equipment, consists of several operating divisions. Division A has decided to go outside the company to buy materials since division B plans to increase its selling price for the same materials to $200. Information for division A and division B follows: Outside price for materials $145 Division A’s annual purchases 9,500 units Division B’s variable costs per unit $135 Division B’s fixed costs, per year $ 1,240,000 Division B’s capacity utilization 100 % Required: 1. Assume that division B cannot sell its materials to outside buyers. Calculate the net cost or benefit to the company as a whole if Division A purchases the materials outside the company. 2-a. Assume that division B can save $165,000 in fixed costs if it does not manufacture the material for Division A. Calculate the net cost or benefit to the company as a whole for A to purchase outside the company. 2-b. From the standpoint of the effect of…