Part WY4 Costs the Eastern Division of Tyble Corporation $26

question 19

Multiple Choice

Part WY4 costs the Eastern Division of Tyble Corporation $26 to make-direct materials are $10,direct labor is $4,variable manufacturing overhead is $9,and fixed manufacturing overhead is $3.Eastern Division sells Part WY4 to other companies for $30.The Western Division of Tyble Corporation can use Part WY4 in one of its products.The Eastern Division has enough idle capacity to produce all of the units of Part WY4 that the Western Division would require.What is the lowest transfer price at which the Eastern Division should be willing to sell Part WY4 to the Central Division?

• A)$30
• B)$26
• C)$23
• D)$27

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Definitions:

Production Budget

A Production Budget is an estimate of the number of units that must be manufactured to meet sales goals and, therefore, it details the cost of raw materials, labor, and other resources necessary for production.

Finished Goods

Products that have completed the manufacturing process and are ready to be sold to customers.

Units

Measurements or quantities of a product, item, or component, often used in inventory and production management.

Assumptions And Predictions

The process of making educated guesses or hypotheses about future events based on current or past information.