Question 18 Mazuka, Inc. has a division that manufactures a component that sells

Question

Question 18

Mazuka, Inc. has a division that manufactures a component that sells for $150 and has a variable cost of $45. Another division of the company wants to purchase the component. Fixed cost per unit of the component is $20. What is the transfer price if the division is operating at full capacity?

Select one:

A. $65

B. $20

C. $170

D. $150

Question 19

lagship Logistics provides the following information:

What is the company's asset turnover ratio? (Round your answer to two decimal places.)

Select one:

A. 7.00

B. 4.00

C. 4.48

D. 12.44

Question 22

A company produces 1000 packages of chicken feed per month. The sales price is $5 per pack. Variable cost is $1.60 per unit, and fixed costs are $1800 per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will increase from $1.60 to $1.90 per unit, and fixed costs will increase by 10%. The CEO wants to price the new product at a level that will bring operating income up to $2000 per month. What sales price should be charged? (Round your answer to the nearest cent.)

Select one:

A. $3.40

B. $5.88

C. $5.00

D. $3.10

Operating income $1,500,000 Net sales $14,000,000 Average total assets $2,000,000 Management's target rate of return 25%

Explanation / Answer

18 Transfer price if the division is operating at full capacity = $150 19 Asset turnover ratio = 14000000/2000000= 7.00 20 Fixed cost and operating income per unit = (1800*1.1+2000)/1000= $3.98 Sales price = 3.98+1.90= $5.88

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