The Kelly Division of Zimmer Company Sells All of Its

question 28

Essay

The Kelly Division of Zimmer Company sells all of its output to the Finishing Division of the company. The only product of the Kelly Division is chair legs that are used by the Finishing Division. The retail price of the legs is £20 per leg. Each chair completed by the Finishing Division requires four legs. Production quantity and cost data for 2004 are as follows:
Required:
Compute the transfer price for a chair leg using:

a.
market price.
b.
variable product costs plus a fixed fee of 20 percent.
c.
full cost plus 20 percent markup.
d.
variable costs.
e.
full cost plus 10 percent markup.

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Definitions:

Mathematics Class

An educational session or course where mathematical theories, principles, and problem-solving techniques are taught.

Annual Precipitation

The total amount of precipitation, including rain, snow, sleet, or hail, that falls in a given area over a year.

Cities

Large, densely populated urban areas that serve as the major centers of culture, politics, economy, and social services.

Millimetres

A metric unit of length equal to one thousandth of a meter.