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28 Sep 2019
Wordsmith is a publishing company with a number of different booklines. Each line has contracts with a number of different authors.The company also owns a printing operation called Pronto Press. Thebook lines and the printing operation each operate as a separateprofit center. The printing operation earns revenue by printingbooks by authors under contract with the book lines owned byWordsmith, as well as authors under contract with other companies.The printing operation bills out at $0.01 per page, and a typicalbook requires 500 pages of print. A manager from Business Books,one of the Wordsmith's book lines, has approached the manager ofthe printing operation offering to pay $0.007 per page for 1,200copies of a 500-page book. The book line pays outside printers$0.009 per page. The printing operation's variable cost per page is$0.006.
Calculate the change in contribution margin to each division, andto the company as a whole, if top management forces the printingoperation to accept the $0.007 per page transfer price when it hasno available capacity. (If a net loss, record amount using either anegative sign preceding the number eg -45 or parentheses eg(45).)
$
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Wordsmith is a publishing company with a number of different booklines. Each line has contracts with a number of different authors.The company also owns a printing operation called Pronto Press. Thebook lines and the printing operation each operate as a separateprofit center. The printing operation earns revenue by printingbooks by authors under contract with the book lines owned byWordsmith, as well as authors under contract with other companies.The printing operation bills out at $0.01 per page, and a typicalbook requires 500 pages of print. A manager from Business Books,one of the Wordsmith's book lines, has approached the manager ofthe printing operation offering to pay $0.007 per page for 1,200copies of a 500-page book. The book line pays outside printers$0.009 per page. The printing operation's variable cost per page is$0.006.
Calculate the change in contribution margin to each division, andto the company as a whole, if top management forces the printingoperation to accept the $0.007 per page transfer price when it hasno available capacity. (If a net loss, record amount using either anegative sign preceding the number eg -45 or parentheses eg(45).)
$
Click here if you would like to Show Work for this question
Calculate the change in contribution margin to each division, andto the company as a whole, if top management forces the printingoperation to accept the $0.007 per page transfer price when it hasno available capacity. (If a net loss, record amount using either anegative sign preceding the number eg -45 or parentheses eg(45).)
$
Click here if you would like to Show Work for this question
Elin HesselLv2
28 Sep 2019