Exam 8: Reporting and Analyzing Receivables

Sales volume plays a large role in determining per unit costs in the cost-plus pricing approach.

A negotiated transfer price should be used when an outside market for the goods does not exist.

Use the following information for questions The Wood Division of Fir Products, Inc. manufactures rubber moldings and sells them externally for $55. Its variable cost is $25 per unit, and its fixed cost per unit is $7. Fir's president wants the Wood Division to transfer 5,000 units to another company division at a price of $32. -Assuming the Wood Division does not have any available capacity, the minimum transfer price it should accept is

The following per unit information is available for a new product of Red Ribbon Company: Desired ROl \ 20 Fixed cost 40 Variable cost 60 Total cost 100 Selling price 120 Red Ribbon Company's markup percentage would be

Boomer Boombox Inc.wants to produce and sell a new lightweight radio.Desired profit per unit is $1.84.The expected unit sales price is $22 based on 10,000 units.What is the total target cost?

Under the negotiated transfer pricing approach, the maximum transfer price is established by the

Use the following information for questions Custom Shoes Co. has gathered the following information concerning one model of shoe: Variable manufacturing costs \ 40,000 Variable selling and administrative costs \ 20,000 Fixed manufacturing costs \ 160,000 Fixed selling and administrative costs \ 120,000 Investment \ 1,700,000 ROl 30\% Planned production and sales 5,000 pairs -What is the total cost per pair of shoes?

In cost-plus pricing, the target selling price is computed as

Use the following information for questions The Dairy Division of Famous Foods, Inc. produces and sells milk to outside customers. The operation has the capacity to produce 200,000 gallons of milk a year. Last year's operating results were as follows: Sales (160,000) gallons \ 500,000 Variable costs 312,000 Contribution margin 188,000 Fixed costs 100,000 Net Income \ 88,000 -Assume the Dairy Division is operating at capacity.If the Yogurt Division wants to purchase 30,000 gallons of milk from the Dairy Division, what is the minimum price that will allow the Dairy Division to maintain its current net income?

The first step for time-and-material pricing is to calculate the material loading charge.

Prices are set by the competitive market when

Use the following information for questions The Dairy Division of Famous Foods, Inc. produces and sells milk to outside customers. The operation has the capacity to produce 200,000 gallons of milk a year. Last year's operating results were as follows: Sales (160,000) gallons \ 500,000 Variable costs 312,000 Contribution margin 188,000 Fixed costs 100,000 Net Income \ 88,000 -Assume the Yogurt Division wants to purchase 30,000 gallons of milk from the Dairy Division.The minimum price that will increase the Dairy Division's profit is

Use the following information for questions Custom Shoes Co. has gathered the following information concerning one model of shoe: Variable manufacturing costs \ 40,000 Variable selling and administrative costs \ 20,000 Fixed manufacturing costs \ 160,000 Fixed selling and administrative costs \ 120,000 Investment \ 1,700,000 ROl 30\% Planned production and sales 5,000 pairs -What is the target selling price per pair of shoes?

Wheels 'N Spokes' labor charge per hour in 2016 would be

The cost-plus pricing model gives consideration to the demand side-whether customers will pay the target selling price.

Use the following information for questions The Lumber Division of Paul Bunyon Homes Inc. produces and sells lumber that can be sold to outside customers or within the company to the Construction Division. The following data have been gathered for the coming period: Lumber Division: Capacity 200,000 board feet Price per board foot \ 2.50 Variable production cost per bd. ft. \ 1.25 Variable selling cost per bd. ft. \ 0.50 Construction Division: Board feet needed 60,000 Outside price paid per bd.ft. \2 .00 If the Lumber Division sells to the Construction Division, $0.35 per board foot can be saved in shipping costs. -If current outside sales are 150,000 board feet, what is the minimum transfer price that the Lumber Division could accept?

Under the variable-cost approach, the cost base consists of all of the variable costs associated with a product except variable selling and administrative costs.

When using cost-plus pricing, which amount per unit does not change when the expected volume differs from the budgeted volume?

The ROI percentage is

The first step in the absorption-cost approach is to compute the