Whispering Winds Corporation manufactures car stereos. It is a division of Berna Motors, which manufactures vehicles. WhisperingWinds sells car stereos to Berna, as well as to other vehicle manufacturers and retail stores. The following information is available forWhispering Winds's standard unit: unit variable cost $36, unit fixed cost $22, and unit selling price to outside customer $85. Bernacurrently purchases a standard unit from an outside supplier for $80. Because of quality concerns and to ensure a reliable supply, thetop management of Berna has ordered Whispering Winds to provide 224,000 units per year at a transfer price of $34 per unit.Whispering Winds is already operating at full capacity. Whispering Winds can avoid $3 per unit of variable selling costs by selling theunit internally.Answer each of the following questions.(a)Your AnswerCorrect Answer (Used)What is the minimum transfer price that Whispering Winds should accept?Minimum transfer price$82

To determine the minimum transfer price that Whispering Winds should accept, we need to consider the…

Answered: Whispering Winds Corporation…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Diversified Industries manufactures sump-pumps. Its most popular product is called the Super Soaker, which has a retail price of $1,200 and costs $540 to manufacture. It sells the Super Soaker on a standalone basis directly to businesses. Diversified also provides installation services for these commercial customers, who want an emergency pumping capability (with regular and back-up generator power) at their businesses. Diversified also distributes the Super Soaker through a consignment agreement with Menards. Income data for the first quarter of 2017 from operations other than the Super Soaker are as follows. Revenues $9,500,000 Expenses 7,750,000 Diversified has the following information related to two Super Soaker revenue arrangements during the first quarter of 2017.1. Diversified sells 30 Super Soakers to businesses in flood-prone areas for a total contract price of $54,600. In addition to the pumps, Diversified also provides installation (at a cost of $150 per pump). On a…
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On June 1, 2020, Cheyenne sold 90 washer/dryer units without installation to Laplante Rentals for $63,900. Laplante is a newer customer and is unsure how this product will work in its older rental units. Cheyenne offers a 60-day return privilege and estimates, based on prior experience with sales on this product, 4% of the units will be returned. Prepare the journal entries for the sale and related cost of goods sold on June 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit 63,900 Sales Revenue 63,900 (To record sales) Cost of Goods Sold 35,100 Inventory 35,100 (To record cost of goods sold)
Wildhorse Center is an experienced home appliance dealer. Wildhorse Center also offers a number of services for the home appliances that it sells. Assume that Wildhorse Center sells ovens on a standalone basis. Wildhorse Center also sells installation services and maintenance services for ovens. However, Wildhorse Center does not offer installation or maintenance services to customers who buy ovens from other vendors. Pricing for ovens is as follows. Oven only $820 Oven with installation service $830 Oven with maintenance services. $980 Oven with installation and maintenance services $891 In each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $160. Additionally, the incremental amount charged by Wildhorse Center for installation approximates the amount charged by independent third parties. Ovens are sold subject to a general right of return. If a customer purchases an oven with installation and/or…
Lockrite Security Company manufacturers home alarms. Currently, it is manufacturing one of its components at a total cost of $40, which includes fixed costs of $13 per unit. An outside provider of this component has offered to sell Lockrite the component for $29. Provide a differential analysis of the outside purchase proposal. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Make Component (Alternative 1) or Buy Component (Alternative 2) MakeComponent(Alternative 1) BuyComponent(Alternative 2) DifferentialEffects(Alternative 2) Unit costs: Purchase price Variable costs Fixed costs Total unit costs $
Sandhill Center is an experienced home appliance dealer. Sandhill Center also offers a number of services for the home appliances that it sells. Assume that Sandhill Center sells ovens on a standalone basis. Sandhill Center also sells installation services and maintenance services for ovens. However, Sandhill Center does not offer installation or maintenance services to customers who buy ovens from other vendors. Pricing for ovens is as follows. Oven only Oven with installation service $790 860 Oven with maintenance services 990 Oven with installation and maintenance services 954 In each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $200. Additionally, the incremental amount charged by Sandhill Center for installation approximates the amount charged by independent third parties. Ovens are sold subject to a general right of return. If a customer purchases an oven with installation and/or maintenance services,…
Tulsa Company is a car brake repair and replacement company operating in the after-sales market. Tulsa's purchasing manager uses two suppliers (Stirdulo and Fallimento) for the source of its passenger car brakes. Data relating to brake discs (Discs) and brake pads (Pads) are given below. I. Activity costs Activity Adverse buying* $800,000 Supplier returns* 100,000 II. Supplier Data Stridulo Brakes Fallimento Brakes Discs Pads Discs Pads Unit purchase price $53.75 $148.75 $46.50 $146.50 Units purchased 10,000 10,000 15,000 15,000 Insufficient units 2,000 2,000 6,000 6,000 Returned units 500 500 1,500 1,500 Required: 1. Calculate the activity rates for assigning costs to suppliers. 2. Calculate the total unit purchasing cost for each component for each supplier. 3. What if the quantity of brake pads that can be purchased is limited to 20,000 units from Stridulo and 25,000 units…
Video Planet (VP) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer's home entertainment systen. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $1,750 and sells the remote separately for $100, and offers the entire package for $1,900. VP does not sell the installation service separately. VP is aware that other similar vendors charge $150 for the installation service. VP also estimates that it incurs approximately $100 of compensation and other costs for VP staff to provide the installation service. VP typically charges 40% above cost on similar sales. Required: 1. to 3. Calculate the stand-alone selling price of the installation service using each of the following approaches. Stand-Alone Selling Price Adjusted market…
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Video Planet (VP) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer's home entertainment system. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $2,030, sells the remote separately for $240, and offers the entire package for $2,460. VP does not sell the installation service separately. VP is aware that other similar vendors charge $290 for the installation service. VP also estimates that it incurs approximately $240 of compensation and other costs for VP staff to provide the installation service. VP typically charges 50% above cost on similar sales. nces Required: 1. to 3. Estimate the stand-alone selling price of the installation service using each of the following approaches. Adjusted market assessment Expected cost plus…
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