User Account

All Pages

West Industries, Cost Accounting

Assignment Help:
West Industries is a highly decentralized corporation with independent operating divisions.
Each division is evaluated and rewarded based on its total net income. One of the divisions,
Visic, manufactures and sells air conditioners. Visic is projecting sales of 17,400 for next year.
Another division, Weber, makes and sells compressors. Its projected income statement for
next year follows:
Weber Division
Pro forma income statement
For next year
Per unit Total
Sales revenues $100 $ 6,400,000
Less cost of goods sold:
Direct materials 12 768,000
Direct labour 8 512,000
Variable overhead 10 640,000
Fixed overhead 11 704,000
41 2,624,000
Gross profit 59 3,776,000
Operating expenses:
Variable selling expenses 6 384,000
Fixed selling expenses 4 256,000
Fixed administrative expenses 7 448,000
17 1,088,000
Pre-tax net income $ 42 $ 2,688,000
Weber has the capacity to produce 75,000 compressors annually. Visic currently purchases
compressors from an outside source at $70, and proposes that Weber transfer compressors to
it at a transfer price of $50. The Visic manager justified the low bid based on some cost
savings that should be realized if compressors are transferred. Because specifications for this
compressor are slightly different from Weber’s standard model, $1.50 of direct materials cost
per compressor can be saved and no variable selling expenses will be incurred on
compressors transferred.
Required:
a) Compute the minimum transfer price Weber should accept.
b) Compute the estimated effect on Weber’s net income if the 17,400 compressors are
transferred at $50 each.
c) Determine whether it would be in West Industries’ best interest for Weber to transfer
compressors at $50 each.

Related Discussions:- West Industries

Prepare a statement of cash flows, 2012                     2011 Cash   ...

2012                     2011 Cash                               12200                 17700 Acct receivable                  25200                  22300 Investments

Factory overhead, Why do we separate factory overhead from materials and la...

Why do we separate factory overhead from materials and labor?

Calculate the annual percentage rate, Amanda Deal, president of XYZ, had re...

Amanda Deal, president of XYZ, had recently finished an arduous round of meetings with her financial staff". Those meetings dealt with the details necessary to produce an accurate

Determine the net book value, NSC Ltd. has a 31 May fiscal year-end. NSC di...

NSC Ltd. has a 31 May fiscal year-end. NSC disposed of its Information Systems Group (ISG) on 31 January 20X3. ISG had a net loss (after taxes) of $37,700,000 in 20X3, to the date

Variable overhead variance, Variable Overhead Variance This is the dis...

Variable Overhead Variance This is the dissimilarity between the variable overheads absorbed and the actual variable overheads warned. Therefore it can be described as the und

CORPORATE ACCOUNTING, I WENT TO MAKE ONE ASSIGNMENT CAN YOU GIVE ME QUOTE O...

I WENT TO MAKE ONE ASSIGNMENT CAN YOU GIVE ME QUOTE OR LINK TO SHARE ASSIGNMENT DETAIL

Expenditure for the base period and the current period, 1. The table below ...

1. The table below gives data for Southland where there are three consumption goods: bananas, coconuts and grapes. Goods Quantity in base period basket

Elements of non - manufacturing costs, Elements of Non - Manufacturing cost...

Elements of Non - Manufacturing costs Non-Manufacturing costs are costs incurred via all activities such support the production of services and goods. They are selling costs

Determine the joint cost, Determine the Joint Cost A company produces ...

Determine the Joint Cost A company produces three products, Y1, Y2, and Y3 in the similar process.  The data below reflects average monthly results as:

Business and the generation of accounting standards, This time of year we a...

This time of year we all here about football. For me it is the bad news of how poorly the Buffalo Bills are performing. Hopefully your favorite team is doing well. One thing we

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd