Flash ECard Manufacturing manufactures software parts for the computer software systems that produce ecards. The Flash II part is currently manufactured in the Computer Department. The Data Department also produces the part and the plant has excess capacity to produce the Flash II part. The current market price of the Flash II part is​ $700. The managerial accountant reported the following manufacturing costs and variable expense​ data: Flash ECard Manufacturing Manufacturing Costs and Variable Expense Report Flash Component Direct materials ​$810 Direct labor ​$160 Variable manufacturing overhead ​$140 Fixed manufacturing overhead​ (current production​ level) ​$185 Variable selling expenses​ (only incurred on sales to outside​ consumers) ​$136 If the highest acceptable transfer price is​ $700 in the​ market, what is the lowest acceptable inhouse price the Data Department should receive to produce the part inhouse at the Computer​ Department? "810"

Answer:

are like a private tax that redistributes income from consumers to monopoly sellers.

Explanation:

A monopoly is a market structure which is typically characterized by a single-seller who sells a unique product in the market by dominance. This ultimately implies that, it is a market structure wherein the seller has no competitor because he is solely responsible for the sale of unique products without close substitutes. Any individual that deals with the sales of unique products in a monopolistic market is generally referred to as a monopolist.

For example, a public power company is an example of a monopoly because they serve as the only source of power utility provider to the general public in a society.

The higher prices charged by monopolists are like a private tax that redistributes income from consumers to monopoly sellers because the consumers are left with no choice than to patronize these monopolists for essential goods and services since they are the only seller.

Answer:

                                                         Case A         Case B             Case C

Direct materials used                     $ 91,200       $72,720           $131,700

Direct labor                                        59,280         90,560             18,500

Manufacturing overhead                   49,120         82,680            105,500

Total manufacturing costs               199,600       245,960          255,700

Work in process 1/1/20                       26,710         17,110             84,200

Total cost of work in process          226,310        263,070        339,900

Work in process 12/31/20                   37,910        13,240              71,550

Cost of goods manufactured           188,400      249,830         268,350

Explanation:

Given:

                                                        Case A          Case B           Case C

Direct materials used                           $ (a)         $72,720          $131,700

Direct labor                                         59,280       90,560                (g)

Manufacturing overhead                    49,120       82,680            105,500

Total manufacturing costs               199,600             (d)              255,700

Work in process 1/1/20                           (b)             17,110                  (h)

Total cost of work in process          226,310            (e)              339,900

Work in process 12/31/20                       (c)            13,240              71,550

Cost of goods manufactured           188,400              (f)                    (i)

Therefore, we have:

Case A

a. Direct materials used = Total manufacturing costs - Direct labor - Manufacturing overhead = 199,600 - 59,280 - 49,120 = 91,200

b. Work in process 1/1/20 = Total cost of work in process - Total manufacturing costs = 226,310 - 199,600 = 26,710

c. Work in process 12/31/20 = Total cost of work in process - Cost of goods manufactured = 226,310 - 188,400 = 37,910

Case B

d. Total manufacturing costs = Direct materials used + Direct labor + Manufacturing overhead = 72,720 + 90,560 + 82,680 = 245,960

e. Total cost of work in process = Total manufacturing costs + Work in process 1/1/20 = 245,960 + 17,110 = 263,070

f. Cost of goods manufactured = Total cost of work in process - Work in process 12/31/20 = 263,070 - 13,240 = 249,830

Case C

g. Direct labor = Total manufacturing costs - Direct materials used - Manufacturing overhead = 255,700 - 131,700 - 105,500 = 18,500

h. Work in process 1/1/20 = Total cost of work in process - Total manufacturing costs = 339,900 - 255,700 = 84,200

i. Cost of goods manufactured = Total cost of work in process - Work in process 12/31/20 = 339,900 - 71,550 = 268,350