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urgent pls Alpha Corporation is a manufacturer of bicycles with two divisions. The frame division produces the bicycle frames, which are then transferred to the
urgent pls
Alpha Corporation is a manufacturer of bicycles with two divisions. The frame division produces the bicycle frames, which are then transferred to the finishing division, which installs the tyres and other accessories. The company's best-selling product is the famous BMX bicycle The frame division also sells its frames directly to other bicycle manufacturers, who install their own tyres and accessories, and brand it with their own names. The sales price for a frame is 80, The finishing division sells its finished bicycle for 190 The standard cost of bicycle is detailed as follows Division Frame Division Finishing Direct material EIS 30 Direct labor 20 EIS Variable overhead 30 30 Total 65 75 "Excluding the cost of material transferred from the frame division Required: a) Assume that the frame division has no excess capacity Use the general transfer pricing principle to compute the transfer price for frame division (5 marks) i) Calculate the transfer price if it is based on standard variable cost with a 10 percent markup. Will the Frame Division accept the transfer at this price? (5 marks) CONTINUEDI BE131-6-AU 3 b) Assume that the frame division has excess capacity 1) Use the general transfer pricing principle to compute the transfer price for framex (5 marks) 1) Explain why your answers to requirements (ai) and (bi) differ. (5 marks) 1) Suppose that the predetermined fixed-overhead tate in the frame division is 125% of direct-labor cost. Calculate the transfer price if it is based on standard full cost plus 10% markup Step by Step Solution
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