Question : *111.Merlin Component’sHillside Division currently operating at 100 percent capacity (capacity : 1302903

 

*111.Merlin Component’sHillside Division is currently operating at 100 percent capacity (capacity is 100,000 units). The normal selling price for its wrap film is $12 per case. At current operating levels, fixed costs are $3 per case and variable costs are $7 per case. Another division of Merlin Components would like to buy from the Hillside Division. If this sale is made, $1.20 per case in variable selling and administrative costs can be saved. Calculate the most acceptable transfer price per unit.

A.$10.80

B.$12.00

C.$7.00

D.$5.80

 

*112.The GrainDivision of Goodness Grains produces oat grain with the following characteristics:

 

Capacity in bushels              90,000

Selling price per bushel              $22

Variable cost per bushel              $10

Fixed cost per bushel              $4

 

The Cereal Division within the same company would like to buy the oat grain from the Grain Division.It is now purchasingits oat grain from an outside supplier for $20per bushel.If the GrainDivision sells to the Cereal Division, $3 in variable costs can be avoided.The GrainDivision is currently operating at capacity and selling all production outside the company.If the Grain Division decides to sell to the Cereal Division, what is the minimum transfer price per bushel?

A.$20

B.$19

C.$15

D.$22

 

*113.The West Division produces a part with the following characteristics:

 

Capacity (units)              20,000

Selling price per unit              $33

Variable cost per unit              $18

Fixed cost per unit              $4

 

East Division within the same company would like to buy this part from the West Division.The East Division is currently purchasing the part from an outside supplier for $40 per unit.If the West Division sells to the East Division, $5 in variable costs can be avoided.Suppose that the West Division has enough capacity to handle the demand from the East division with no change in fixed costs.From the West Division’s perspective, what is the minimum sales transfer price that West division should charge to the East Division?

A.$14

B.$28

C.$18

D.$13

 

*114.The Component Division of Sharp Ware Products produces blades for knives with the following characteristics:

 

Annual capacity– number of knives                            60,000

Selling price per unit              $7.00

Variable cost per unit              $3.80

Fixed cost per unit              $1.60

 

TheHunting Division within the same company would like to buy its required supply of blades from the Component Division. Currently, the Hunting Division purchasesthe blades it uses to manufacture hunting knives from an outside supplier for $5.80 each.If the Component Divisionsells to the Hunting Division, it can save $0.70 per blade.The ComponentDivision is currently operating at capacity and selling all its production outside the company.If the Component Division decides to sell to the Hunting Division, what is the transfer price?

A.$6.30

B.$7.00

C.$3.80

D.$3.10

 

115.Division 3 of Baritune Enterprisesreportedsales of $820,000,NOPAT totaling$61,500, interest expense of $8,000, and invested capital totaling $512,500.Its income tax rate is 30 percent. As it pertains to evaluating investment centers, how much is Division 3’s profit margin?

A.12.0%

B.7.5%

C.8.2%

D.1.6%

 

116.Hardin Division of WestCo hassales of $300,000 andNOPAT of $15,000.The company’s invested capital is $240,000 and its non-interest-bearing current liabilities are $20,000.What is Hardin Division’s profit margin as it relates to investment center performance evaluation?

A.8.0%

B.6.25%

C.5.0%

D.6.8%

 

117.Division 3 of Baritune Enterprisesreported sales of $820,000, NOPAT totaling $61,500, interest expense of $8,000, and invested capital totaling $512,500. Its income tax rate is 30%. As it pertains to evaluating investment centers, how much is Division 3’sinvestment turnover?

A.1.60

B.7.50

C.12.00

D.0.625

 

118.Hardin Division of WestCo. has sales of $300,000 and NOPAT of $15,000. The company’s invested capital is $240,000 and its noninterest-bearing current liabilities are $20,000. What is Hardin Division’sinvestment turnover as it relates to investment center performance evaluation?

A.5.00

B.6.25

C.1.25

D.0.80

119.The Media Division of WinslowCompany has invested capital of $1,250,000, sales of $590,000, net incomeof $44,250, and interest expense of $7,000.Winslow’s income tax rate is 40 percent. What is the Media Division’s return on investment?

A.3.76%

B.3.88%

C.0.47%

D.3.76%

 

120.Last year, Processor Division of Mathews PC Company earned NOPAT of $200,000 on sales of $2,600,000. The division had invested capital of $1,600,000 with $62,000 of noninterest-bearing current liabilities. How much is the division’s return on investment?

A.12.5%

B.13.0%

C.7.7%

D.61.5%