Hydroxide Company Has Two Divisions, the Blending Division and Canning

question 42

Multiple Choice

Hydroxide Company has two divisions, the Blending Division and Canning Division. The Blending Division sells chemicals to the Canning Division. Standard costs for the Blending Division are as follows:
Direct materials $3.00 per gallon
Direct labor 2.40 per gallon
The Canning Division uses the following predetermined overhead rate:
Variable overhead $3.60 per gallon
Fixed overhead 2.40 per gallon
Total $6.00 per gallon
What is the transfer price for the chemicals per gallon based on standard variable cost?

• A) $3.00
• B) $9.00
• C) $5.40
• D) $11.40

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Definitions:

Corporate Social Responsibility

A business model where companies integrate social and environmental concerns in their operations and interactions with stakeholders.

Financially Sound

A term describing the state of having strong financial health and stability, often characterized by good cash flow, low debt, and strong profitability.

Economic

Pertaining to the production, consumption, and transfer of wealth within a society or region.

Ethical Dilemma

A situation in which a person must choose between two or more actions that have different moral implications, making it difficult to decide the right course of action.