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Please show your work for each section and than fill the answers the way they show above. Word Wizard is a publishing company with a
Please show your work for each section and than fill the answers the way they show above.
Word Wizard is a publishing company with a number of different book lines. Each line has contorts with a number of different authors. The company also owns a printing operation called Quick Press. The book lines and the printing operation each operate as a separate profit center. The printing operation earns revenue by printing books by authors under contract with the book lines owned by Word/Wizard, as authors under contract with other companies. The printing operation bills out at $0.01 per page, and a typical book require 500 pages of print. A manger from Business books, one of the Work Wizard's books, one of the Word Wizard's has approached the manager of the printing operation offering to pay $0.007 per page for 1, 500 copies of a 500 page book. The book line pays outside printers $0.009 per page. The printing operation's variable cost per page is $0.004 Determine whether the printing should be done internally or externally, and the appropriate transfer price, under each of the following situation. Assume that the printing operation is booked solid for the next 2 years, and it would have to cancel an obligation with an outside customer in order to meet the needs of the internal division. Assume the printing operation has available capacity. Calculate the change in contribution margin to each division, and to the company as a whole, if top management forces the printing to accept the $0.007 per page transfer price when it has no available capacityStep by Step Solution
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