Benjamin Manufacturing Company Has Two Divisions, X and Y

question 95

Essay

Benjamin Manufacturing Company has two divisions, X and Y. Division X prepares the steel for processing. Division Y processes the steel into the final product. No inventories exist in either division at the beginning or end of 2018. During the year, Division X prepared 80,000 lbs. of steel at a cost of $800,000. All the steel was transferred to Division Y where additional operating costs of $5 per lb. were incurred. The final product was sold for $3,000,000.
Required:
a.Determine the gross profit for each division and for the company as a whole if the transfer price is $8 per lb.
b.Determine the gross profit for each division and for the company as a whole if the transfer price is $12 per lb.

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Definitions:

Secondary Rewards

Rewards that are learned to be valuable through association with primary rewards or through social conditioning.

Sheffield

A city in South Yorkshire, England, known for its history in steel production and green spaces.

Effective Studying

Strategies or methods that enhance learning efficiency, comprehension, and retention of information.

Reward Magnitude

The size or value of a reward, which can influence the speed and strength of the learning process.