Now suppose that the Western Division has an opportunity to…

Now suppose that the Western Division has an opportunity to use its excess capacity to produce 15,000 headbands. If it makes these, then it cannot make any socks for the Eastern Division without giving up some of its (highly profitable) external sock business. Western’s incremental (variable) cost of producing and selling headbands is $3.65 per unit, and they are sold to external customers for $5.25 per unit. If the transfer price for socks remains at $4.00, then which product will the Western Division want to make in order to maximize its own profit?

Grounded Coffee Products manufactures coffee tables. Grunded…

Grounded Coffee Products manufactures coffee tables. Grunded Coffee Products has a policy of adding a 10% markup to full costs. The following information pertains to the company’s normal operations per month: Output units 30,000  tables Direct manufacturing labor-hours 10,000  hours Direct materials per unit $90   Direct manufacturing labor per hour $18   Variable manufacturing overhead costs $270,000   Fixed manufacturing overhead costs $1,500,000   Marketing and distribution costs $1,350,000     Grounded Coffee should set the price at $____________ per unit.

Texas Boots Inc. is considering the production of a new line…

Texas Boots Inc. is considering the production of a new line of boots. Based on preliminary market research, management has decided that each pair of boots should be priced at $300. If management believes that the profit margin should be 30 percent of sales revenue, the target cost is $____________