Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Blade Division of ABC Co. produces hardened steel blades. One-third of the Blades Division's output is sold to the Lawn Products Division of Dana; the

Blade Division of ABC Co. produces hardened steel blades. One-third of the Blades Division's output is sold to the Lawn Products Division of Dana; the remainder is sold to outside customers. The Blade Division's estimated sales and standard costs data for the fiscal year ending June 30 are as follows:

Lawn Products Outsiders

Sales P15,000 P40,000

Variable costs (10,000) (20,000)

Fixed costs (3,000) (6,000)

Gross margin P2,000 P14,000

Unit sales 10,000 20,000

Lawn Products can buy the blades from an outside supplier at P1.50 each.Assume the Blade Division is now at capacity and sufficient demand exists to sell all production to outsiders at present prices, what is the differential cost (benefit) of selling the all blades to external customers?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

College Accounting Chapters 1-15

Authors: James A Heintz, Robert W Parry

19th Edition

0324376162, 978-0324376166

More Books

Students also viewed these Accounting questions

Question

4. Avoid pointing or gesturing.

Answered: 1 week ago