B compute the material loading percentage overhead

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Business Law: Text and Cases
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Chapter 22 / Exercise 3
Business Law: Text and Cases
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bCompute the material loading percentage.
cRCE has just received a request for a bid from Buil Builders on a $1,200,000 new home. The company estimates that it would require 80 hours of labor and $40,000 of parts. Compute the total estimated bill.
P8-5AGutierrez Company makes various electronic products. The company is divided into a number of autonomous divisions that can either sell to internal units or sell externally. All divisions are located in buildings on the same piece of property. The Board Division has offered the Chip Division $21 per unit to supply it with chips for 40,000 boards. It has been purchasing these chips for $22 per unit from outside suppliers. The Chip Division receives $22.50 per unit for sales made to outside customers on this type of chip. The variable cost of chips sold externally by the Chip Division is $14.50. It estimates that it will save $4.50 per chip of selling
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Business Law: Text and Cases
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Chapter 22 / Exercise 3
Business Law: Text and Cases
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Lana Edwards ACC 560 Homework week 5expenses on units sold internally to the Board Division. The Chip Division has no excess capacity.Instructions1.Calculate the minimum transfer price that the Chip Division should accept. Discuss whether it is in the Chip Division's best interest to accept the offer.2.Suppose that the Chip Division decides to reject the offer. What are the financial implications for each division, and for the company as a whole, of this decision?(b) Total loss to company $160,000Determine minimum transfer price under different situations.SolutionMinimum Transfer PriceVariable cost$ 10.00 Add Opportunity cost$ 8.00 $ 18.00 The company should therefore sell the chip internally as this cost is lower than the $21 offered externallyFinancial Implications if the offer is rejectedLost Contribution by Division BCost of buying externally$ 22.00 Cost of buying internally$ 21.00 Increase in cost$ 1.00 Number of units purchased40000Total Contribution margin Lost$ 40,000.00 Lost Contribution by Division CUnit contribution on internal sales$ 11.00 Unit contribution on external sales$ 8.00 Lost Contribution by Division C$ 3.00 Number of units sold40000Total Contribution margin Lost$ 120,000.00 Total Contribution Lost to Company$ 160,000.00
Lana Edwards ACC 560 Homework week 5

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