Question

Bagley & Daughters is a baked-goods manufacturing firm. Bagley has two main divisions: Packaged Mixes and Finished Desserts. The Finished Desserts division is considering purchasing the mix for its cakes from an outside supplier. The Packaged Mixes department incurs the following costs for each batch of cake mix: Direct Materials: $80 Direct Labor: $30 Variable Overhead: $50 Fixed Overhead: $30 In addition to the cost of the cake mix, the Finished Desserts Department would incur the following costs for each batch of cakes: Direct Materials: $24 Direct Labor: $40 Variable Overhead: $60 Fixed Overhead: $26 The current market price from an outside supplier for the quantity of mix needed by the Finished Desserts department is $200. The finished cakes from each batch of mix will sell for $400. What is the range of transfer prices within which the two departments could agree on a price to maximize Bagley & Daughters’ profit? Group of answer choices $175 to $200 $160 to $200 $190 to $200 $284 to $400

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format.