Cost Accounting-Summer Date Session II 2018 Exam #1 37) Plish Company manufa Com
ID: 2396715 • Letter: C
Question
Cost Accounting-Summer Date Session II 2018 Exam #1 37) Plish Company manufa Compressor Division, and the Fabrication Division. The Compressor Division manura actures only one type of washing machine and has two divisions, the on Division, which completes the washing machine and sells it to retailers. The ctures compressors market price for the Fabrication be the same over the range of 12000-17,000 units. The fixed costs for Compressor Division "sells" compressors to the Fabrication Division. The ma Division to vision to purchase a compressor is $42.00. Ognore changes in inventory The fixed costs for the Compressor Division are assumed to the Fabrication Division on are assumed to be $8.00 per unit at 17,000 units. Compressor's costs per compressor are Direct materials Direct labor Variable overhead Division fixed costs$10.50 $20 $24.00 $4.50 Fabrication's costs per completed air conditioner are Direct materials Direct labor Variable overhead Division fixed costs $170.00 $66.00 $23.00 $10.50 Assume the transfer price for a compressor is 145% of total costs of the Compressor Division and 1500 of the compressors are produced and transferred to the Fabrication Division. The Compressor Division's operating income is A) $128,325 B) $39,825 C) $42,188 D) $29,400Explanation / Answer
Compressor division Direct material 20 Direct labor 24 Variable overheads 4.5 Division fixed cost 10.5 Total cost 59 Profit margin 26.55 Number of units 1500 Total profits 39825 Correct answer is B