Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Wildhorse International Corporation has two divisions, Division A and Division B. Division A produces a motor that sells for $81 per unit, with the following

Wildhorse International Corporation has two divisions, Division A and Division B. Division A produces a motor that sells for $81 per unit, with the following costs based on its capacity of 186,000 units:

Direct materials $31
Direct labour 26
Variable overhead 8
Fixed overhead 5

Division A is operating at 70% of normal capacity and Division B is purchasing 21,500 units of the same component from an outside supplier for $75 per unit.

Calculate the benefit, if any, to Division A in selling to Division B the 21,500 units at the outside suppliers price.

Benefit $enter the amount of benefit in dollars

Calculate the lowest price Division A would be willing to accept.

Lowest price $enter the lowest price in dollars

If Division A is operating at full capacity, what would be the lowest transfer price that it is willing to accept?

Lowest transfer price $enter the lowest transfer price in dollars

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting Tools for Business Decision Making

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly

4th Canadian edition

1118856996, 978-1118856994

More Books

Students also viewed these Accounting questions