Answer the Following Question(s)using the Information Below

question 136

Multiple Choice

Answer the following question(s) using the information below.Beta Shoe Ltd.manufactures only one type of shoe and has two divisions, the Sole Division, and the Assembly Division.The Sole Division manufactures soles for the Assembly Division, which completes the shoe and sells it to retailers.The Sole Division "sells" soles to the Assembly Division.The market price for the Assembly Division to purchase a pair of soles is $20.(Ignore changes in inventory.) The per unit fixed costs are based on a production of 60,000 pairs of shoes.Sole's costs per pair of soles are:
Assembly's costs per completed pair of shoes are:

-What is the transfer price per pair of soles from the Sole Division to the Assembly Division if the method used to place a value on each pair of soles is 180% of variable costs?

• A)$14.40
• B)$12.60
• C)$16.20
• D)$28.80
• E)$32.40

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Definitions:

Quality of Income Ratio

A measure that compares cash flow from operating activities to net income, indicating the quality of a company's earnings.

Unearned Revenue

Revenue received by a company for goods or services yet to be delivered or performed.

Equipment Purchase

The act of acquiring equipment or machinery for the purpose of enhancing a company’s operational capacity or efficiency.

Noncash Financing

Funding activities that involve liabilities and equity but do not involve the inflow or outflow of cash, such as issuing stock or converting debt to equity.