(Journal entries) Sports Bag Division makes top-of-the-line travel bags that are sold to external buyers and are also being used by the Wholesale Sporting Goods Division as part of a complete tennis racket set. During the month just ended, Wholesale Sporting Goods acquired 2,000 bags from Sports Bag Division. Sports Bag’s standard unit costs are

Wholesale Sporting Goods can acquire comparable bags externally for $40 each. Give the entries for each division for the past month if the transfer is to be recorded

a. at Wholesale Sporting Goods’ external purchase price.

b. at a negotiated price of variable cost plus 15 percent of production cost.

c. by Sports Bag at Wholesale Sporting Goods’ external price and by Wholesale Sporting Goods at Sports Bag’s variable production cost.

d. at Sports Bag’s absorption cost.

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Direct materials Direct labor Variable factory overhead Fixed factory overhead Variable selling Fixed selling and administrative $10 3 2 3