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The Table division of Timber Products, Inc. sells all of its output to the Finishing Division of the company. The only product of the Table division is an unfinished table line that is used by the Finishing Division. The retail price of the tables is P5,000 per table. Production quantity and cost data are as follows: Tables                          1,000 Direct materials            P450,000 Direct labor                  300,000 Factory overhead (25% variable)      300,000 Operating expenses (80% fixed)          500,000   Required: Determine the transfer price for a table using the following: Absorption costs plus 20% Variable cost Total costs plus 10%

The Table division of Timber Products, Inc. sells all of its output to the Finishing Division of the company. The only product of the Table division is an unfinished table line that is used by the Finishing Division. The retail price of the tables is P5,000 per table. Production quantity and cost data are as follows: Tables                          1,000 Direct materials            P450,000 Direct labor                  300,000 Factory overhead (25% variable)      300,000 Operating expenses (80% fixed)          500,000   Required: Determine the transfer price for a table using the following: Absorption costs plus 20% Variable cost Total costs plus 10%

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 14EA: Cool Pool has these costs associated with production of 20,000 units of accessory products: direct...
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The Table division of Timber Products, Inc. sells all of its output to the Finishing Division of the company. The only product of the Table division is an unfinished table line that is used by the Finishing Division. The retail price of the tables is P5,000 per table. Production quantity and cost data are as follows:


Tables                          1,000
Direct materials            P450,000
Direct labor                  300,000
Factory overhead (25% variable)      300,000
Operating expenses (80% fixed)          500,000
 

Required: Determine the transfer price for a table using the following:

  • Absorption costs plus 20%
  • Variable cost
  • Total costs plus 10%
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