Management of the catering company would like the food division to transfer 10,000 cans of its final product to the restaurant d
ivision for $30. the food division sells the product to customers for $70 per unit. the food division's variable cost per unit is $35 and its fixed cost per unit is $10. if the food division is currently operating at full capacity, what is the minimum transfer price the food division should accept? a. $30
b. rises, because the number of dollars needed to buy a representative basket of goods rises
Explanation:
As for an instance when goods purchased in normal circumstance for $100 = 100 units, now when the price rises to $200 for the same quantity, then in $100, we can only buy $200/100 units = $2 per unit that means for $100 we can get only $100/$2 = 50 units which means value of money has fallen as earlier with same dollars we could buy 100 units now only 50 units, which states value of money has fallen.
Final Answer
b. rises, because the number of dollars needed to buy a representative basket of goods rises
At the time of receiving the document, the client's debt is canceled and the registration of the document <em>plus</em> interest is recorded (2000 x 0.05 = 100)
notes receivable 2.100
Accounts Receivable 2.000
interest to accrue 100
then at the time of payment (we assume its in cash, we record the income, the cancellation of the document and the interest earned.