Answers:

(1) (a) $5,000,000; (b) $2,500,000; (c) 2; (d) $100,000; (e) 4%; (f) 2.5

(2)$4,440; $3,100

(3) (a) minimum = $100, maximum = $95; (b) minimum = $72; maximum = $90

74. (1) Provide the missing data in the following Northern Southern DivisionDivision $(a)$250,000 $(d) $10,000 Sales Operating assets Net operating income $ (b) $400,000 0.08 Margin Turnover Return on investment 16% 10% la(b)(e) (d) ; (e) :0 (2) Division A sells products to Division B. The standard unit costs for Division A are: Direct materials Direct labor Variable overhead Fixed overhead $ 800 1,500 400 300 500 200 4,575 Variable operating expenses Fixed operating expenses Market price per unit The transfer price based on full cost plus a markup of 20 percent is $The transfer price based on variable product costs plus a fixed fee of $400 is $ (3) There are two divisions in Ralph Co. Division A has a product that can be sold either to outside customers or to Division B. The company uses the opportunity cost approach to determine transfer price. Information about these divisions is given below: Case 1 Case 2 Division A Capacity in units Number of units sold externally Market selling price Variable costs per unit Fixed costs per unit based on capacity 10,000 10,000 $100 10,000 6,000 $125 60 72 10 10 Division B: Number of units needed for production 4,000 4,000 $90 (a) In Case 1, the minimum transfer price is $and the maximum transfer price is Purchase price per unit from external supplier $95 (b) In Case 2, the minimum transfer price is $and the maximum transfer price is