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Please provide formulas/solutions used when posting solutions to all required parts Problem 7, 15 points: The Chip Division of Computer Co. has just revised its
Please provide formulas/solutions used when posting solutions to all required parts
Problem 7, 15 points: The Chip Division of Computer Co. has just revised its actual cost data for the year just ended. Chip Division transfers circuit boards to the Assembly Division, and incurs no selling expense for such transfers, but it can also sell circuit boards to external buyers. Assembly Division can buy the same goods in the open market for $142 each. Chip's new cost data are: Direct materials 60 Direct labor 15 Variable manufacturing overhead 30 Fixed manufacturing overhead Variable selling expenses 6 Fixed selling and administrative expenses 12 Total costs $131 Desired return 20 Sales price $151 Current production is 400,000 units, and Chip has a capacity of 600,000 units. Required: 1. what is the lowest price Chip should charge for the internal transfer ofits goods? 2. What is the highest price Assembly should pay Chip for the units? 3. Should Chip should reduce its price for internal transfers below the market price? Explain why or why not Step by Step Solution
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