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Hi, I need help with the following for a managerial accounting course: REQUIRED: 1) Determine the transfer price for a yard of string using each
Hi, I need help with the following for a managerial accounting course:
REQUIRED:
1) Determine the transfer price for a yard of string using each of the following: a. Market price b. Variable product costs plus 35% c. Absorbtion costs plus 12% d. Variable costs e. Total costs plus 10%
2) What is the lowest price the String Division should charge for the internal transfer to the Assembly Division?
3) What is the highest price that the Assembly Divison should pay for the string?
Transfer Pricing JayCo Ltd. manufactures string (only) for tennis racquets in their String Division. The Frame Division builds the alloy frames (only), and then Assembly threads the string into the frames. The retail price of the string is $15 per yard. Production and cost information for the String Division follows Yards of String (1 yard per racquet) Direct materials Direct labor Manufacturing overhead (25% is variable) Operating Expenses (15% is variable) 10,000 $45,000 $30,000 $80,000 $ 55,000 The String Divison has a current capacity to produce 15,000 yards of string
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