A Company Established a Branch to Sell Automobile Seat Covers

question 74

Multiple Choice

A company established a branch to sell automobile seat covers. The company purchases these covers and stores them in a warehouse. The covers are then shipped from the warehouse to both the home office and the new branch, FOB (Free On Board) destination. Home office management is responsible for setting the transfer price of the covers charged to the branch. Per-unit costs of the covers are: $$\begin{array} { | r | l | } \hline \$ 60.00 & \text { purchase price } \\\hline \$ 2.50 & \text { shipping cost to warehouse } \\\hline \$ 3.00 & \text { handling cost, including } \$ 1 \text { allocated administrative overhead } \\\hline \$ 3.50 & \text { shipping cost to branch, paid by home office } \\\hline\end{array}$$ According to the general transfer-pricing formula given in the text, the minimum transfer price that home office should charge the branch is:

• A)$62.50.
• B)$63.50.
• C)$66.00.
• D)$68.00.
• E)$69.00.

Identify and describe the components disclosed in the Stockholders' equity section of the balance sheet.

Comprehend the significance and calculation of earnings per share for a corporation.

Distinguish between different types of stock within the Stockholders' equity section and their reporting.

Calculate basic earnings per share and understand the effect of preferred dividends.

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Definitions:

Semifluid Matrix

A viscous, semi-liquid substance found within various biological systems, such as the cytoplasm of a cell, providing a medium for cellular processes.

Dermis

The layer of dense connective tissue beneath the epidermis in the skin of vertebrates.

Digestive Tract

A continuous, hollow passage starting from the mouth to the anus through which food is ingested, digested, absorbed, and waste material expelled.

Blood Vessels

Blood vessels are tubular structures in the circulatory system that transport blood throughout the body, including arteries, veins, and capillaries.