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Hillwood Corporation is a conglomerate that manufactures many different types of products in its worldwide operations. The plastics division of the company sells all of

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Hillwood Corporation is a conglomerate that manufactures many different types of products in its worldwide operations. The plastics division of the company sells all of its output to the toy products division of the company. The management of both divisions have argued extensively about the appropriate transfer price for the plastic. During 1985, 20,000 tons of plastic were produced and sold to the toy division. The corporate controller has decided to evaluate several possible transfer prices for 1985. Below are 1985 production and operating costs for the plastics division: Direct material Direct labor Manufacturing overhead (20% variable) Operating expenses (30% variable) 5640.000 300.000 240.000 180,000 Required: Compute the transfer price for plastic using: a. Full product cost. b. Variable product cost. c. Total costs. d. Variable product cost plus 40 percent. e. Total variable cost. f. Target profit of 12 percent of total costs. Hillwood Corporation is a conglomerate that manufactures many different types of products in its worldwide operations. The plastics division of the company sells all of its output to the toy products division of the company. The management of both divisions have argued extensively about the appropriate transfer price for the plastic. During 1985, 20,000 tons of plastic were produced and sold to the toy division. The corporate controller has decided to evaluate several possible transfer prices for 1985. Below are 1985 production and operating costs for the plastics division: Direct material Direct labor Manufacturing overhead (20% variable) Operating expenses (30% variable) 5640.000 300.000 240.000 180,000 Required: Compute the transfer price for plastic using: a. Full product cost. b. Variable product cost. c. Total costs. d. Variable product cost plus 40 percent. e. Total variable cost. f. Target profit of 12 percent of total costs

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