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Author Question: Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching ... (Read 443 times)

kwoodring

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on: Mar 6, 2021
Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching Division and the Polishing Division. The Stitching Division manufactures shoes for the Polishing Division, which completes the shoes and sells them to retailers. The Stitching Division "sells" shoes to the Polishing Division. The market price for the Polishing Division to purchase a pair of shoes is $50. (Ignore changes in inventory.) The fixed costs for the Stitching Division are assumed to be the same over the range of 40,000-103,000 units. The fixed costs for the Polishing Division are assumed to be $22 per pair at 103,000 units.

 Stitching's costs per pair of shoes are:
Direct materials$11
Direct labor$9
Variable overhead$7
Division fixed costs$5

 Polishing's costs per completed pair of shoes are:
Direct materials$20
Direct labor$7
Variable overhead$10
Division fixed costs$16

Calculate and compare the difference in overall corporate net income of Branded Shoe Company between Scenario A and Scenario B if the Assembly Division sells 103,000 pairs of shoes for $120 per pair to customers.

 Scenario A: Negotiated transfer price of $33 per pair of shoes
 Scenario B: Market-based transfer price 

◦ $1,751,000 more net income under Scenario A
◦ $1,751,000 less net income using Scenario B
◦ $103,000 less net income using Scenario A.
◦ The net income would be the same under both scenarios.
Horngren's Cost Accounting: A Managerial Emphasis ¦ Datar, Rajan ¦ 16th Edition
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Marked as best answer by kwoodring on Mar 6, 2021

tdewitt

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Reply #1 on: Mar 6, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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kwoodring

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Reply 2 on: Mar 6, 2021
:D TYSM

robbielu01

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Reply 3 on: Yesterday
Gracias!

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