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Assume that there is excess capacity in the Frame Division. Use the general rule to compute the transfer price for window frames.
Assume that there is excess capacity in the Frame Division. Use the general rule to compute the transfer price for window frames.
2-c. Suppose the predetermined fixed-overhead rate in the Frame Division is 125 percent of direct-labor cost. Calculate the transfer price if it is based on standard full cost plus a 10 percent markup.
2-d. The Glass Division has been approached by the U.S. Army with a special order for 1,600 windows at $388. Assume the transfer price established in requirement 2-c. above is being used.
i.What is the incremental contribution (loss) per window for Clearview Window Company as a whole if this special order is accepted?
ii.From the perspective of Clearview Window Company as a whole, should the special order be accepted or rejected?
2-e. The Glass Division has been approached by the U.S. Army with a special order for 1,600 windows at $388. Assume the transfer price established in requirement 2-c. above is being used.
i. What is the incremental contribution (loss) per window for the Glass Division if this special order is accepted?
ii.Will an autonomous Glass Division manager accept or reject the special order?
