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Compute the transfer price for a chair leg

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Reference no: EM132968012

Question - 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 P20 per leg. Each chair completed by the Finishing Division requires four legs. Production quantity and cost data for 2011 are as follows:

Chair legs 30,000

Direct materials P135,000

Direct labor P90,000

Factory overhead (25% is variable) P90,000

Operating expenses (20% is variable) P150,000

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

Reference no: EM132968012

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