Homework Help is Here – Start Your Trial Now!
Business
Accounting
The machining division of Cullumber International has a capacity of 2, 100 units. Its sales and cost data are:Selling price per unit$85Variable manufacturing costs per unit20Variable selling costs per unit4Total fixed manufacturing overhead213, 300The machining division is currently selling 1,900 units to outside customers, and the assembly division of Cullumber International wants to purchase 400 units from machining. If the transaction takes place, the variable selling costs per unit on the units transferred to assembly will be $0/unit, and not $4/unit. If Cullumber's assembly division is currently buying from an outside supplier at $80 per unit, what will be the effect on overall company profits if internal sales for 400 units take place at the optimum transfer price?

The machining division of Cullumber International has a capacity of 2, 100 units. Its sales and cost data are:Selling price per unit$85Variable manufacturing costs per unit20Variable selling costs per unit4Total fixed manufacturing overhead213, 300The machining division is currently selling 1,900 units to outside customers, and the assembly division of Cullumber International wants to purchase 400 units from machining. If the transaction takes place, the variable selling costs per unit on the units transferred to assembly will be $0/unit, and not $4/unit. If Cullumber's assembly division is currently buying from an outside supplier at $80 per unit, what will be the effect on overall company profits if internal sales for 400 units take place at the optimum transfer price?

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 6PA: Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A...
See similar textbooks
icon
Related questions
Question
The machining division of Cullumber International has a capacity of 2, 100 units. Its sales and cost data are:Selling price per unit$85Variable manufacturing costs per unit20Variable selling costs per unit4 Total fixed manufacturing overhead213, 300The machining division is currently selling 1,900 units to outside customers, and the assembly division of Cullumber International wants to purchase 400 units from machining. If the transaction takes place, the variable selling costs per unit on the units transferred to assembly will be $0/unit, and not $4/unit. If Cullumber's assembly division is currently buying from an outside supplier at $80 per unit, what will be the effect on overall company profits if internal sales for 400 units take place at the optimum transfer price?
Transcribed Image Text:The machining division of Cullumber International has a capacity of 2, 100 units. Its sales and cost data are:Selling price per unit$85Variable manufacturing costs per unit20Variable selling costs per unit4 Total fixed manufacturing overhead213, 300The machining division is currently selling 1,900 units to outside customers, and the assembly division of Cullumber International wants to purchase 400 units from machining. If the transaction takes place, the variable selling costs per unit on the units transferred to assembly will be $0/unit, and not $4/unit. If Cullumber's assembly division is currently buying from an outside supplier at $80 per unit, what will be the effect on overall company profits if internal sales for 400 units take place at the optimum transfer price?
Expert Solution
steps

Step by step

Solved in 4 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Cost allocation
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Essentials of Business Analytics (MindTap Course …
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS