Paige Inc. has a division that makes paint and another division that constructs subdivisions. The paint division
Fantastic news! We've Found the answer you've been seeking!
Question:
Paige Inc. has a division that makes paint and another division that constructs subdivisions. The paint division incurs the following costs for one gallon of paint:
Direct materials | $1.10 | |
Direct labor | 1.45 | |
Variable overhead | 0.90 | |
Fixed overhead | 1.15 | |
Total | $4.60 |
The Paint Division can make 1,000,000 gallons per year and expects to produce 1,000,000 gallons next year. The construction division currently buys 200,000 gallons of paint from an outside supplier for $5.30 per gallon (the same price that the Paint Division receives).
Round your answers to the nearest cent.
A. The maximum transfer price per gallon of paint is | |
B. The minimum transfer price per gallon of paint is |
C. Does it matter whether or not the two divisions transfer?
Related Book For
Cost Management Accounting and Control
ISBN: 978-0324559675
6th Edition
Authors: Don R. Hansen, Maryanne M. Mowen, Liming Guan
Posted Date: