Examlex

Solved

Sugar Company Has Two Divisions,Lenox and Berkshire

question 126

Essay

Sugar Company has two divisions,Lenox and Berkshire.Lenox produces an item that Berkshire could use in its production.Berkshire currently is purchasing 100,000 units from an outside supplier for $43 per unit.Lenox is currently operating at full capacity of 750,000 units and has variable costs of $28 per unit.The full cost to manufacture the unit is $35.Lenox currently sells 750,000 units at a selling price of $44 per unit.
a.What will be the effect on Sugar Company's operating profit if the transfer is made internally?
b.What will be the change in profits for Lenox if the transfer price is $40 per unit?
c.What will be the change in profits for Berkshire if the transfer price is $40 per unit?


Definitions:

Type 1 Diabetes

A chronic autoimmune condition where the pancreas produces little to no insulin, leading to high blood sugar levels.

Young Children

Refers to children in their early stages of development, typically from infancy to around 8 years of age, characterized by rapid physical and cognitive growth.

Head Lice

Small, parasitic insects that infest the hair and scalp causing itching and discomfort, primarily spread through close contact.

Central Line

A catheter placed into a large vein, often in the neck, chest, or groin, to deliver medications or fluids, or to measure pressures.

Related Questions