Problem 1

East Division and West Division are investment centers of X Corp. East produces product X with the following data: Sales (produced and sold are 10,000 units) at 1,000,000; Direct labor of 250,000; Direct materials of 200,000 and Overhead of 300,000 (1/3 is Fixed) . East is operating at 80% capacity. West would like to buy 5,000 units from East. What is the minimum transfer price that East can charge to West without reducing its current profitability?

a. 65 per unit

b. 78.50 per unit

c. 100 per unit

d. 82.50 per unit

e. None of the above

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Problem 2

MARCELO Corp has budgeted sales for the upcoming quarter as follows: Jan is 15,000; Feb is 18,000 and March is 16,500 units. The ending FG inventory for each month equals 50% of the next months budgeted sales. Additionally, 3 pounds of DM are required to produce each FG unit processed. The ending DM inventory for each month equals 200% of next month's production requirements. If DM cost P4.00 per kilo and must be paid for in the month of purchased, the budgeted DM purchases (in pesos) for January are?

a. 98,182

b. 216,000

c. 112,380

d. 198,648

e. None of the above

**** please show the computation/solution for the problem. it will be a big help if you answer this in 10-20 mins. thank you so much ****