Assume that Selling Division and Buying Division are both owned by Overall Corporation. Selling Division sells a product that is used by Buying Division and outside customers. Selling Division has 35,000 units of excess capacity. Selling Division currently sells the product for $30 per unit and Buying Division currently buys 35,000 units of the product from an outside source for $30 per unit. Variable costs of the product are $6, of which $1.5 is the cost of seling the product to an outside customer. Using Selling price less avoidable costs as the minimum price, fill in the following formula for the desired transfer price: $ transfer price All work saved. Email Instructor Save and Exit Submit Assignment for Grading Zee-Drive Ltd. is a computer manufacturer. One of the items they make is monitors. Zee-Drive has the opportunity to purchase 16,000 monitors from an outside supplier for $200 per unit. One of the company's cost-accounting interns prepared the following schedule of Zee- Drive's cost to produce 16,000 monitors: Total cost of producing 16,000 monitors Unit cost Direct materials $ 1,824,000 $ 114 Direct labor 1,120,000 Variable factory overhead 512,000 Fixed manufacturing overhead 400,000 Fixed non-manufacturing overhead 704,000 $4,560,000 285 You are asked to look over the intern's estimate before the information is shared with members of management who will decide to continue to make the monitors or buy them. The company's controller believes that the estimate may be incorrect because it includes costs that are not relevant. If Zee-Drive buys the monitors, the direct labor force currently employed in producing the monitors will be terminated and there would be no termination costs incurred. There are no materials on hand and no commitments to suppliers to purchase materials, so all materials would need to be purchased to make the monitors. Variable overheads are avoidable if monitors are bought. Fixed manufacturing overhead costs would be reduced by $43,500, but non-manufacturing costs would remain the same if monitors are bought. Fill in the differential analysis. Make or Buy Decisions Differential Analysis Report Check My Work All work saved. Email Instructor Save and Exit Submit Assignment for Grading Zee-Drive Ltd. is a computer manufacturer. One of the items they make is monitors. Zee-Drive has the opportunity to purchase 16,000 monitors from an outside supplier for $200 per unit. One of the company's cost-accounting interns prepared the following schedule of Zee- Drive's cost to produce 16,000 monitors: Total cost of producing 16,000 monitors Unit cost Direct materials $ 1,824,000 $ 114 Direct labor 1,120,000 Variable factory overhead 512,000 Fixed manufacturing overhead 400,000 Fixed non-manufacturing overhead 704,000 $4,560,000 285 You are asked to look over the intern's estimate before the information is shared with members of management who will decide to continue to make the monitors or buy them. The company's controller believes that the estimate may be incorrect because it includes costs that are not relevant. If Zee-Drive buys the monitors, the direct labor force currently employed in producing the monitors will be terminated and there would be no termination costs incurred. There are no materials on hand and no commitments to suppliers to purchase materials, so all materials would need to be purchased to make the monitors. Variable overheads are avoidable if monitors are bought. Fixed manufacturing overhead costs would be reduced by $43,500, but non-manufacturing costs would remain the same if monitors are bought. Fill in the differential analysis. Make or Buy Decisions Differential Analysis Report Check My Work
