alpha and beta division

Alpha Division Taxes: Transfer Price Less (subtract) Cost Taxable Income Taxes (or refund) Beta Division Taxes: Sales Price Less (subtract) Transfer Price Taxable Income Income Taxes Import Duty Taxes (or refund) Total Taxes The Better Chair Company manufactures high-end chairs in alpha division in a country with a 35% income tax rate and transfers these chairs to beta division in a country with a 40% income tax. An import duty of 10% of the transfer price is paid on all imported products. The import duty is not deductible in computing taxable income. The fixed cost for a high-end chair is $300 and the variable cost is $650, which brings the full cost (i.e., total cost) for each chair to $950. They are sold by beta division for $1050. The tax authorities in both countries allow firms to use either variable cost or full cost as the transfer price. a) Price variance = (actual price - standard price) times quantity bought Plastic tubing Fabric Padding b) Wage rate variance = (Actual wage rate standard wage rate ) times actual hours Direct labor c)Total price variance 500 d) Quantity variance = (actual quantity used in production - standard quantity used in production) times the standard price Plastic tubing Fabric Padding e) Labor efficiency variance = (actual hours - standard hours) times standard wage Direct labor f) Total quantity variance TOTAL VARIANCES Plastic tubing Fabric Padding Direct labor TOTAL Actual Costs Incurred for 500 Chairs Produced