(Answered)-8.16 The Safeway division of Amco Prod ucts man ufact ures batteries that it sells pri Alpha-Beta...

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8.16          The Safeway division of Amco Prod ucts man ufact ures batteries that it sells pri Alpha-Beta division for inclusion wit h that division 's main prod uct. In 19A, half of were sold to outside companies at a price of $2 each. The remain ing batteries Alpha-Beta division. Cost data for 198 for the Safeway division are given below   Prod uction I 20,000  u nits Variable man ufact urin g costs $120,000 Fixed overhead $60,000 Selling  expenses  (all variable) $30,000 Administrative  expenses  (all  fixed) $20,000   1.      What should be the transfer price for the bat teries if the company uses: ( a )        Market    price? ( b)   Variable cost? (c)       A negotiated  transfer price that  will yield  a mark up of 20 percen t on   its (absorption cost) for  Safeway? 2.      Prepare a schedule of Safeway division's contribution margin  for  each  of pricing alternatives computed in part 1.          

 

Solution ID:10137803 | Question answered on 16-Oct-2016

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