Global Supplies Inc. sells its products all over the world. It's International Division manufactures a product which is sold to its customers for \$1400 per unit. Its unit variable cost is \$755, and its unit fixed cost is \$250. Top management of Global would like the International division to manufacture and transfer 200 units of the product to another division within the company. The International Division has sufficient capacity to fill the order. What is the minimum transfer price that the International Division should accept?
Added by Jeffery B.
Close
Step 1
The total cost per unit is the sum of the unit variable cost and the unit fixed cost. Total cost per unit = Unit variable cost + Unit fixed cost Total cost per unit = $755 + $250 Total cost per unit = $1005 Show more…
Show all steps
Your feedback will help us improve your experience
Adi S and 92 other Principles of Accounting educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Recommended Videos
Division One of Loverei Company is currently operating at 70% of capacity. It produces a single product and sells all its production to outside customers for $70 per unit. Variable costs are $30 per unit and fixed costs are $20 per unit at the current production level. Division Two, which currently buys the same product from an outside supplier for $65 per unit, would like to buy the product from Division One. Division One will use one-half of its idle capacity if it decides to provide the requirements of Division Two. What is the minimum price that Division One should charge Division Two for this product?
Adi S.
The Molding Division of Cotswold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $27 per unit. Variable costs for the casing are $14 per unit and fixed costs are $3 per unit. Cotswold executives would like the Molding Division to transfer 10,000 units to the Assembly Division at a price of $19 per unit. Assume the Molding Division is operating at full capacity. Required: 1. Should it accept the transfer price proposed by management?
Manasvee S.
To produce 1 unit of a new product, a company determines that the cost for material is $2.50 and the cost of labor is $4. The fixed cost, regardless of sales volume, is $18000. If the selling price is $8 per unit, determine the least number of units that must be sold by the company to realize a profit.
Rylie H.
Recommended Textbooks
Horngren’s Cost Accounting
Cost Accounting A Managerial Emphasis
Principles of Accounting Volume 1: Financial Accounting
Transcript
18,000,000+
Students on Numerade
Trusted by students at 8,000+ universities
Watch the video solution with this free unlock.
EMAIL
PASSWORD