Bernie Manufacturing Company Has Two Divisions, X and Y

question 40

Essay

Bernie 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 2011. During the year, Division X prepared 80,000 kgs. of steel at a cost of £800,000. All the steel was transferred to Division Y where additional operating costs of £5 per kg. were incurred. The final product was sold for £3,000,000.
a.Determine the gross profit for each division and for the company as a whole if the transfer price is £8 per kg.
b.Determine the gross profit for each division and for the company as a whole if the transfer price is £12 per kg.

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Definitions:

Phenotypic Display

A term used in genetics and evolutionary biology to refer to the observable physical or biochemical characteristics of an organism as determined by both genetic makeup and environmental influences.

Epigenetics

The idea that some environments can influence how much genetics will matter.

Different Families

A reference to the diversity in family structures, ranging from nuclear families to single-parent, extended, and non-traditional arrangements.

Different Cultures

Refers to the variety of lifestyles, traditions, and values held by groups of people in different geographic, social, or ethnic backgrounds.