Answer the following questions using the information below:
NSW Farmers Coop has two divisions: Distribution and Production.The company's primary product is fertiliser.Each division's costs are provided below:
$$\begin{array} { l r l }
\text { Production: } & \text { Variable costs per kilo } & \$ 0.05 \
& \text { Fixed costs per kilo } & \$ 0.25 \
\text { Distribution: } & \text { Variable costs per kilo } & \$ 0.03 \
& \text { Fixed costs per kilo } & \$ 0.02
\end{array}$$ The Distribution Division has been operating at a capacity of 4 000 000 kilos a week and usually purchases 2 000 000 kilos from the Production Division and 2 000 000 kilos from other suppliers at $0.45 per kilo.
-What is the transfer price per kilo from the Production Division to the Distribution Division,assuming the method used to place a value on each kilo of fertiliser is 160% of variable costs?
A)$0.11
B)$0.40
C)$0.08
D)$0.05

Question

Answer the following questions using the information below:
NSW Farmers Coop has two divisions: Distribution and Production.The company's primary product is fertiliser.Each division's costs are provided below:
 $$\begin{array} { l r l } 
\text { Production: } & \text { Variable costs per kilo } & \$ 0.05 \
& \text { Fixed costs per kilo } & \$ 0.25 \
\text { Distribution: } & \text { Variable costs per kilo } & \$ 0.03 \
& \text { Fixed costs per kilo } & \$ 0.02
\end{array}$$ The Distribution Division has been operating at a capacity of 4 000 000 kilos a week and usually purchases 2 000 000 kilos from the Production Division and 2 000 000 kilos from other suppliers at $0.45 per kilo.
-What is the transfer price per kilo from the Production Division to the Distribution Division,assuming the method used to place a value on each kilo of fertiliser is 160% of variable costs?
A)$0.11
B)$0.40
C)$0.08
D)$0.05

Quizplus · Accepted Answer

The transfer price per kilo is calculated as 160% of the variable costs. If the variable cost per kilo is not directly provided, we use the information given to calculate it based on the method described. Assuming the variable cost is $0.05 (as an example, since the actual variable cost is not provided in the question), 160% of $0.05 would be $0.08. This method applies to whatever the base variable cost is, with the final transfer price being 160% of that cost.

Answer the Following Questions Using the Information Below: NSW Farmers

Answer the Following Questions Using the Information Below:
NSW Farmers