Calculate the transfer price if it is based on standard

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Reference no: EM133360278

Clearview Window Company manufactures windows for the home-building industry. The window frames are produced in the Frame Division. The frames are then transferred to the Glass Division, where the glass and hardware are installed. The company's best-selling product is a three-by-four-foot, doublepaned operable window.

The Frame Division also can sell frames directly to custom home builders, who install the glass and hardware. The sales price for a frame is $80. The Glass Division sells its finished windows for $190. The markets for both frames and finished windows exhibit perfect competition.

The standard variable cost of the window is detailed as follows:

Frame Division Glass Division

Direct material $ 15 $ 30 *

Direct labor 20 15

Variable overhead 30 30

Total $ 65 $ 75

*Not including the transfer price for the frame.

Assume that there is no excess capacity in the Frame Division.

Required:

1-a. Use the general rule to compute the transfer price for window frames.

1-b. Calculate the transfer price if it is based on standard variable cost with a 10 percent markup. (Round your answer to 2 decimal places.)

Reference no: EM133360278

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