2010-09-21_143817_awhalen

2010-09-21_143817_awhalen - Solutions Guide: Please reword...

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Solutions Guide: Please reword the answers to essay type parts so as to guarantee that your answer is an original. Do not submit as is E8-11) (a) The minimum transfer price is: Minimum transfer price = Variable cost + opportunity cost Given that the Small Motor Division has excess capacity, the minimum transfer price is the variable cost of $8.00 per unit. (b) Given no excess capacity, the minimum transfer price is $30, which is its variable cost plus the lost contribution margin. (c) The level of capacity plays a significant role in determining the appropriate transfer price. If a division has no excess capacity, why should it sell its product below a selling price it can obtain in an outside market? Conversely, if it has excess capacity, as long as it receives more than its variable cost, it has a net gain. BE9-6) SAVAGE INC. Manufacturing Overhead Budget For the Year Ending December 31, 2005 Quarter 1 2 3 4 Year Variable costs Fixed costs Total manufacturing overhead $20,000 35,000
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This note was uploaded on 03/01/2012 for the course ACC all taught by Professor All during the Spring '12 term at University of Phoenix.

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2010-09-21_143817_awhalen - Solutions Guide: Please reword...

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