Delta Company manufactures only one type of washing machine and has two divisions, the Compressor Division,...
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Delta Company manufactures only one type of washing machine and has two divisions, the Compressor Division, and the Fabrication Division. The Compressor Division manufactures compressors for the Fabrication Division, which completes the washing machine and sells it to retailers. The Compressor Division "sells" compressors to the Fabrication Division. The market price for the Fabrication Division to purchase a compressor is $40.00. (Ignore changes in inventory.) The fixed costs for the Compressor and Fabrication Divisions are assumed to be the same over the range of 1,000 - 5,000 units. Compressor's costs per compressor are: Direct materials Direct labour Variable overhead Division fixed costs $14 $6.77 $3.00 $7.53 Fabrication's costs per completed washing machine are: Direct materials Direct labour $153 (excluding the transfer price of the compressor) $61.14 Variable overhead $19 Division fixed costs $7 If the Fabrication Division sells 994 units of the washing machines at a price of $363 per washing machine to customers, calculate Delta's operating income. Delta Company manufactures only one type of washing machine and has two divisions, the Compressor Division, and the Fabrication Division. The Compressor Division manufactures compressors for the Fabrication Division, which completes the washing machine and sells it to retailers. The Compressor Division "sells" compressors to the Fabrication Division. The market price for the Fabrication Division to purchase a compressor is $40.00. (Ignore changes in inventory.) The fixed costs for the Compressor and Fabrication Divisions are assumed to be the same over the range of 1,000 - 5,000 units. Compressor's costs per compressor are: Direct materials Direct labour Variable overhead Division fixed costs $14 $6.77 $3.00 $7.53 Fabrication's costs per completed washing machine are: Direct materials Direct labour $153 (excluding the transfer price of the compressor) $61.14 Variable overhead $19 Division fixed costs $7 If the Fabrication Division sells 994 units of the washing machines at a price of $363 per washing machine to customers, calculate Delta's operating income.
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Total cost of compression for the Compressor division 1 1400 677 300 753 3130 Selling price for ... View the full answer
Related Book For
Accounting
ISBN: 978-0324188004
21st Edition
Authors: Carl s. warren, James m. reeve, Philip e. fess
Posted Date:
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