division of ronald inc produces polarized glass required for LCD panels .The mon
ID: 2564500 • Letter: D
Question
division of ronald inc produces polarized glass required for LCD panels .The monitor division purchases pieces of the glass from the display division.the following data are available on the cost of glass that is transferred to the montior division from the division:
The transportation cost is the cost of transporting the pieces of glass from the display division to the end user.
The division also sells the polarized glass to outside suppliers and still has idle capacity.The selling price to outside suppliers is $65 per unit, and sales representative are paid a commission of $2 per unit.Sales commissions are not paid on transfers to the monitor division.A competitor of the division is currently selling the glass for $62 per unit to suppliers.what is thE transfer price range that the montior division would potentially pay to the display division?
prime cost per unit $32.00 variable manufacturing overhead per unit 6.50 fixed manufacturing overhead per unit 4.00 transportation cost 1.00Explanation / Answer
Notes
Relevent cost of glass for display division to transfer that to monitor division prime cost per unit $ 32.00 variable manufacturing overhead per unit $ 6.50 transportation cost $ 1.00 Minimum transfer price $ 39.50 Maximum transfer price (competitor price) $ 62.00 (because monitor division would not purchase from display division at price more than the price charged by outside sellers) Hence the range will be $39.5 to $62Related Questions
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