Question

Sheridan Company has fixed costs of $540000 and variable costs are 40% of sales. How much will Sheridan report as sales when its net income equals $54000?

$990000

$1485000

$954000

$237600 Management of the Vaughn Manufacturing would like the Food Division to transfer 9700 cans of its final product to the Restaurant Division for $27. The Food Division sells the product to customers for $67 per unit. The Food Division’s variable cost per unit is $35 and its fixed cost per unit is $8. If the Food Division is currently operating at full capacity, what is the minimum transfer price the Food Division should accept? $43 $67 $27 $35

Answer 1

Solution-1

Correct answer will be $990000

Detail working for refrence

Revised Contribution= Fixed Cost + Net Income

=540000+54000=594000

Contribution Margin Ratio= Sale- variable cost

100-40%=60%

Sales= Revised Contribution Margin/CM Ratio

=$594000/60%=$990000

Solution-2

Minimum Transfer Price Food Division should accept is $67 because food division is currently operated at full operating capacity and product can be sold easily in outside market for $67.