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Division A of Lambda Company manufactures Product X, which is sold to Division B as a component of Product Y. Product Y is sold to
Division A of Lambda Company manufactures Product X, which is sold to Division B as a component of Product Y. Product Y is sold to Division C, which uses it as a component in Product Z. Product Z is sold to customers outside of the company. The intracompany pricing rule is that products are transferred between divisions at standard cost plus a 10 percent return on inventories and fixed assets. From the information provided below, calculate the transfer price for Products X and Y and the standard cost of Product Z. Standard Cost per Unit Material purchased outside Direct labor.. Variable overhead.. Fixed overhead per unit Standard volume Inventories (average) Fixed assets (net) Product X $ 2.00 1.00 1.00 3.00 10,000 $70,000 30,000 Product Y $ 3.00 1.00 1.00 4.00 10,000 $15,000 45,000 Product z $ 1.00 2.00 2.00 1.00 10,000 $30,000 16,000
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