Question : 21) What the Refining Division’s operating income if 150 litres : 1186222

 

21) What is the Refining Division’s operating income if 150 litres of oil are sold at $110 /litre and 200 litres are transferred in? Assume the transfer price is based on 175% of variable costs.

A) $16,500

B) $15,600

C) $8,400

D) $7,500

E) $8,500

22) Division A sells soybean paste internally to Division B, which, in turn, produces soybean burgers that sell for $5 per kilogram. Division A incurs costs of $0.75 per kilogram, while Division B incurs additional costs of $2.50 per kilogram.

What is Division A’s operating income per kilogram assuming the transfer price of the soybean paste is set at $1.25 per kilogram?

A) $0.500

B) $0.875

C) $1.250

D) $1.625

E) $1.525

 

23) Division A sells soybean paste internally to Division B, which, in turn, produces soybean burgers that sell for $5 per kilogram. Division A incurs costs of $0.75 per kilogram, while Division B incurs additional costs of $2.50 per kilogram.

What is Division B’s operating income per kilogram assuming the transfer price of the soybean paste is set at $1.25 per kilogram?

A) $0.500

B) $0.875

C) $1.250

D) $1.625

E) $1.525

 

24) Division A sells soybean paste internally to Division B, which, in turn, produces soybean burgers that sell for $5 per kilogram. Division A incurs costs of $0.75 per kilogram, while Division B incurs additional costs of $2.50 per kilogram.

Which of the following formulas correctly reflects the company’s operating income per kilogram?

A) $5.00 – ($0.75 +$2.50) = $1.75

B) $5.00 – ($1.25 +$2.50) = $1.25

C) $5.00 – ($0.75 +$3.75) = $0.50

D) $5.00 – ($0.25 +$1.25 +$3.50) = 0

E) $5.00 – ($0.25 +$1.25 +$1.50) = $2.00

Answer the following question(s) using the information below:

 

Greenlawn Ltd. has two divisions, Distribution and Production. The company’s primary product is fertilizer. Each division’s costs are provided below:

 

Production:

Variable costs per kilogram

$0.05

 

Fixed costs per kilogram

$0.25

Distribution:

Variable costs per kilogram

$0.03

 

Fixed costs kilogram

$0.02

 

The Distribution Division has been operating at a capacity of 4,000,000 kilograms a week and usually purchases 2,000,000 kilograms from the Production Division and 2,000,000 kilograms from other suppliers at $0.45 per kilogram.

 

25) What is the transfer price per kilogram from the Production Division to the Distribution Division, assuming the method used to place a value on each kilogram of fertilizer is 160% of variable costs?

A) $0.05

B) $0.11

C) $0.08

D) $0.40

E) $0.48

 

26) What is the transfer price per kilogram from the Production Division to the Distribution Division, assuming the method used to place a value on each kilogram of fertilizer is 120% of full costs?

A) $0.30

B) $0.36

C) $0.45

D) $0.55

E) $0.42

27) Assume 100,000 kilograms are transferred from the Production Division to the Distribution Division for a transfer price of $0.40 per kilogram. The Distribution Division sells the 100,000 kilograms at a price of $0.55 each to customers. What is the operating income of both divisions together?

A) $10,000

B) $15,000

C) $20,000

D) $25,000

E) $0

 

Answer the following question(s) using the information below.

 

Beta Shoe Ltd. manufactures only one type of shoe and has two divisions, the Sole Division, and the Assembly Division. The Sole Division manufactures soles for the Assembly Division, which completes the shoe and sells it to retailers. The Sole Division “sells” soles to the Assembly Division. The market price for the Assembly Division to purchase a pair of soles is $20. (Ignore changes in inventory.) The fixed costs for the Sole Division are assumed to be the same over the range of 40,000-100,000 units. The fixed costs for the Assembly Division are assumed to be $7 per pair at 100,000 units.

 

Sole’s costs per pair of soles are:

Direct materials

$4

Direct labour

$3

Variable overhead

$2

Division fixed costs

$1

 

Assembly’s costs per completed pair of shoes are:

Direct materials

$6

Direct labour

$2

Variable overhead

$1

Division fixed costs

$7

 

28) What is the market-based transfer price per pair of soles from the Sole Division to the Assembly Division?

A) $9

B) $10

C) $20

D) $16

E) $27

29) What is the transfer price per pair of soles from the Sole Division to the Assembly Division if the method used to place a value on each pair of soles is 180% of variable costs?

A) $14.40

B) $12.60

C) $16.20

D) $28.80

E) $32.40

 

30) What is the transfer price per pair of shoes from the Sole Division to the Assembly Division per pair of soles if the transfer price per pair of soles is 125% of full costs?

A) $10.00

B) $12.50

C) $11.25

D) $20.00

E) $8.75