Question
Flash ECard Manufacturing manufactures software parts for the computer software systems that produce ecards. The Flash II part is currently manufactured in the Computer Department.
Flash ECard Manufacturing manufactures software parts for the computer software systems that produce ecards. The Flash II part is currently manufactured in the Computer Department. The Data Department also produces the part and the plant has excess capacity to produce the Flash II part. The current market price of the Flash II part is$1,400. The managerial accountant reported the following manufacturing costs and variable expensedata:
Flash ECard Manufacturing
Manufacturing Costs and Variable Expense Report
Flash Component
Direct materials
$810
Direct labor
$190
Variable manufacturing overhead
$120
Fixed manufacturing overhead(current productionlevel)
$135
Variable selling expenses(only incurred on sales to outsideconsumers)
$139
If the highest acceptable transfer price is$1400 in themarket, what is the lowest acceptable inhouse price the Data Department should receive to produce the part inhouse at the ComputerDepartment?
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