Question :
164. Materials used by Jefferson Company in producing Division C’s product : 1227025
164. Materials used by Jefferson Company in producing Division C’s product are currently purchased from outside suppliers at a cost of $10 per unit. However, the same materials are available from Division A. Division A has unused capacity and can produce the materials needed by Division C at a variable cost of $8.50 per unit. A transfer price of $9.50 per unit is negotiated and 30,000 units of material are transferred, with no reduction in Division A’s current sales. How much would Jefferson’s total income from operations increase? A. $45,000B. $120,000C. $60,000D. $150,000
165. The Ukulele Company’s radio division currently is purchasing transistors from the Xiang Co. for $3.50 each. The total number of transistors needed is 8,000 per month. Ukulele Company’s electronics division can produce the transistors for a cost of $4.00 each and they have plenty of capacity to manufacture the units. The $4 is made up of $3 in variable costs, and $1 in allocated fixed costs. What should be the range of a possible transfer price? A. No transfer should take place.B. $3.51 to $3.99C. $3.01 to $3.99D. $3.01 to $3.49
166. Which transfer price approach is used when the transfer price is set at the amount sold to outside buyers? A. Market PriceB. Cost PriceC. Negotiated PriceD. Variable Price
167. The transfer price which uses a variety of cost concepts is the A. Negotiated Price ApproachB. Standard Cost ApproachC. Cost Price ApproachD. Market Price Approach
168. The transfer price that must be less than the market price but greater than the supplying division’s variable costs per unit is called A. the cost price approachB. the negotiated cost approachC. the standard cost approachD. the market price approach
169. Mandolin Company has two divisions. Division A is interested in purchasing 10,000 units from Division B. Capacity is available for Division B to produce these units. The per unit market price is $30 per unit, with a variable cost of $17. The manager of Division A has offered to purchase the units at $15 per unit. In an effort to make this transfer price beneficial for the company as a whole, what is the range of prices that should be used during negotiations between the two divisions? A. $15 to $30B. $15 to $17C. over $30D. $17 to $30
170. ABC Corporation has three service departments with the following costs and activity base:
Service Department
Cost
Activity Base for Allocation
Graphics Production
$200,000
# of copies
Accounting
$500,000
# of invoices processed
Personnel Department
$400,000
# of employees
ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows:
Micro
Macro
Super
Direct Revenues
$700,000
$850,000
$650,000
Direct Operating Expenses
$50,000
$70,000
$100,000
# of copies made
20,000
30,000
50,000
# invoices processed
700
800
500
# of employees
130
145
125
What is the service department charge rate for Graphics Production? A. $2.00B. $10.00C. $6.66D. $.50
171. ABC Corporation has three service departments with the following costs and activity base:
Service Department
Cost
Activity Base for Allocation
Graphics Production
$200,000
# of copies
Accounting
$500,000
# of invoices processed
Personnel Department
$400,000
# of employees
ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows:
Micro
Macro
Super
Direct Revenues
$700,000
$850,000
$650,000
Direct Operating Expenses
$50,000
$70,000
$100,000
# of copies made
20,000
30,000
50,000
# invoices processed
700
800
500
# of employees
130
145
125
What is the service department charge rate for the Personnel Department? A. $2,758B. $3,200C. $3,077D. $1,000
172. ABC Corporation has three service departments with the following costs and activity base:
Service Department
Cost
Activity Base for Allocation
Graphics Production
$200,000
# of copies
Accounting
$500,000
# of invoices processed
Personnel Department
$400,000
# of employees
ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows:
Micro
Macro
Super
Direct Revenues
$700,000
$850,000
$650,000
Direct Operating Expenses
$50,000
$70,000
$100,000
# of copies made
20,000
30,000
50,000
# invoices processed
700
800
500
# of employees
130
145
125
What is the service department charge rate for the Accounting Department? A. $714B. $250C. $625D. $.004
173. ABC Corporation has three service departments with the following costs and activity base:
Service Department
Cost
Activity Base for Allocation
Graphics Production
$200,000
# of copies
Accounting
$500,000
# of invoices processed
Personnel Department
$400,000
# of employees
ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows:
Micro
Macro
Super
Direct Revenues
$700,000
$850,000
$650,000
Direct Operating Expenses
$50,000
$70,000
$100,000
# of copies made
20,000
30,000
50,000
# invoices processed
700
800
500
# of employees
130
145
125
How much service department cost will be allocated to the Micro Division? A. $200,000B. $145,000C. $60,000D. $345,000
174. ABC Corporation has three service departments with the following costs and activity base:
Service Department
Cost
Activity Base for Allocation
Graphics Production
$200,000
# of copies
Accounting
$500,000
# of invoices processed
Personnel Department
$400,000
# of employees
ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows:
Micro
Macro
Super
Direct Revenues
$700,000
$850,000
$650,000
Direct Operating Expenses
$50,000
$70,000
$100,000
# of copies made
20,000
30,000
50,000
# invoices processed
700
800
500
# of employees
130
145
125
How much service department cost would be allocated to the Macro Division? A. $405,000B. $175,000C. $130,000D. $305,000
175. ABC Corporation has three service departments with the following costs and activity base:
Service Department
Cost
Activity Base for Allocation
Graphics Production
$200,000
# of copies
Accounting
$500,000
# of invoices processed
Personnel Department
$400,000
# of employees
ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows:
Micro
Macro
Super
Direct Revenues
$700,000
$850,000
$650,000
Direct Operating Expenses
$50,000
$70,000
$100,000
# of copies made
20,000
30,000
50,000
# invoices processed
700
800
500
# of employees
130
145
125
How much service department cost would be allocated to the Super Division? A. $350,000B. $100,000C. $125,000D. $550,000
176. ABC Corporation has three service departments with the following costs and activity base:
Service Department
Cost
Activity Base for Allocation
Graphics Production
$200,000
# of copies
Accounting
$500,000
# of invoices processed
Personnel Department
$400,000
# of employees
ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows:
Micro
Macro
Super
Direct Revenues
$700,000
$850,000
$650,000
Direct Operating Expenses
$50,000
$70,000
$100,000
# of copies made
20,000
30,000
50,000
# invoices processed
700
800
500
# of employees
130
145
125
What will the income of the Micro Division be after all service department allocations? A. $305,000B. $650,000C. $345,000D. $610,000
177. What will the income of the Macro Division be after all service department allocations? A. $780,000B. $375,000C. $575,000D. $435,000
178. What will the income of the Super Division be after all service department allocations? A. $300,000B. $325,000C. $550,000D. $200,000
