The Mill Flow Company Has Two Divisions

question 5

Essay

The Mill Flow Company has two divisions. The Cutting Division prepares timber at its sawmills. The Assembly Division prepares the cut lumber into finished wood for the furniture industry. No inventories exist in either division at the beginning of 20X5. During the year, the Cutting Division prepared 60,000 cords of wood at a cost of $660,000. All the lumber was transferred to the Assembly Division, where additional operating costs of $6 per cord were incurred. The 600,000 boardfeet of finished wood were sold for $2,500,000.
Required:
a. Determine the operating income for each division if the transfer price from Cutting to Assembly is at cost - $11 a cord.
b. Determine the operating income for each division if the transfer price is $9 per cord.
c. Since the Cutting Division sells all of its wood internally to the Assembly Division, does the manager care what price is selected? Why? Should the Cutting Division be a cost center or a profit center under the circumstances?

Understand the concept and implications of cultural relativism in ethical judgments.

Recognize the impact of high and low power distance on organizational cultures and employee beliefs.

Describe the principles of character theories of ethics and their relevance to individual behavior.

Understand the role and importance of ethical theories in moral reasoning and decision-making.

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Definitions:

Frequency

In physics, the number of occurrences of a repeating event per unit time, often measured in Hertz (Hz).

High C

Refers to high levels of conscientiousness, indicating a personality trait characterized by diligence, meticulousness, and a strong sense of duty.

Clarinet

A woodwind instrument with a distinctive long, cylindrical shape and a single-reed mouthpiece, known for its versatile range of tones.

Amplitude

In physics, the term denotes the maximum extent of a vibration or oscillation, measured from the position of equilibrium.