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jenyasd209 [6]
2 years ago
6

An external competitor to Construction (from another island) is offering to build the new homes for $1300 each. Here are facts a

bout the each of the projects (incline, bridge, campground, new home) Construction is considering:
Revenue Variable Cost Incline $1,400 $600
Bridge $1,500 $950
Campground $2,700 $1,200
New Home ? $700

Island Evaluations only wants to hire one company to build all five homes. In other words, either Construction (internal) will build all five, or the competitor (from another island) will build all five new homes. Island Evaluations plans on selling the homes to new tenants for $2,500 each.

a) What is the minimum transfer price (per home) that Construction would be willing to accept?
b) What is the maximum transfer price (per home) Island Evaluations would be willing to accept?
Business
1 answer:
cupoosta [38]2 years ago
4 0

Answer:

a. The minimum transfer price (per home) that Construction would be willing to accept would be $1,270

b. The maximum transfer price (per home) Island Evaluations would be willing to accept would be $1,300

Explanation:

a. According to the given data If Construction accepts the proposal of Island Evaluations, then it has to foregone the profits which could have been earned if Construction accepted the proposal of local villagers to build an incline, a bridge and a campground.

Hence, minimum transfer price (per home) for Construction should be such that it covers the profit foregone as given above:

Now, profit foregone is calculated as per the table below:

Figures in $

Particulars Revenue Cost Profit

Incline        1400          600 800

Bridge         1500 950  550

Campground 2700 1200 1500

Total        5600 2750 2850

Therefore, the transfer price should be such which can generate a profit of $2,850 for Construction.

Therefore, total revenue which should be generated = Cost of building five new homes + Profit foregone

= 700*5 + 2850 = $6,350

Hence, minimum transfer price (per home) should be = 6350/5 = $1,270

b. The maximum transfer price (per home) that Island Evaluations will be willing to accept is $1,300 per home as quoted by the external competitor from another island.

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Answer:

All of the above would use process costing.

Explanation:

Process costing can be defined as a method of assigning manufacturing costs whereby the cost of each unit produced is assumed to be the same cost for every unit.

Process costing is most commonly applied when goods are produced in large numbers and when the costs linked to individual units cannot be easily differentiated from each other.

Under process costing, costs rise over a fixed period of time, and are then assigned to all the units produced throughout that period.

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3 years ago
A company had beginning inventory of 12 units at a cost of $15 each on March 1. On March 2, it purchased 12 units at $24 each. O
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Answer:

The cost of the 28 units sold is $548

Explanation:

In the given question,  

On March 1 it purchase 12 units for $15 = 12 units × $15 = $180

On March 2 it purchase 12 units for $24 = 12 units × $24 = $288

On March 6 it purchase 7 units for $20 = 7 units × $20 = $140

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The 28 units could be taken from  

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12 × $24 = $288

And remaining 4 units × $20 = $80

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tia_tia [17]

Answer:

D) Income will increase by $10,000.

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DS Unlimited has the following transactions during August.
stealth61 [152]

Solution:

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Inventory                   360 debit

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--to record the freight-in--

A/P                            1,560 debit

    Inventory                                     1,560 credit

--to record returned goods to GameGirl--

A/P                          19,760 debit

      Inventory                                       395 credit

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--to record payment to GameGirl--

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discount because payment within the first ten days:

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Answer:

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