1.Materials used by Square Yard Products Inc. in producing Division 3\'s product
ID: 2390098 • Letter: 1
Question
1.Materials used by Square Yard Products Inc. in producing Division 3's product are currently purchased from outside suppliers at a cost of $5 per unit. However, the same materials are available from Division 6. Division 6 has unused capacity and can produce the materials needed by Division 3 at a variable cost of $3 per unit. A transfer price of $3.20 per unit is established, and 40,000 units of material are transferred, with no reduction in Division 6's current sales.How much would Division 6's income from operations increase?
A $8,000
B $15,000
C $80,000
D $150,000
2. Cost of goods sold
Rails: $47,200
Locomotive: $30,720
Direct operating expenses
Rails: 27,200
Locomotive: 20,040
Net sales
Rails: 98,000
Locomotive: 68,000
Corporate Totals:
Interest expense $ 2,040
General overhead 18,160
Income tax 4,700
The income from operations for the Locomotive Division is
A) $47,800
B) $20,600
C) $17,240
D) $37,280
could you show how the answer is calculated
Explanation / Answer
increased net income=3.20-3*40000=$8000 The income from operations for the Locomotive Division is net sales=68000 less:cost of good sold-30720 income from operations=68000-30720=$37280 note-direct operating expenses are always included in cost of good sold
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.