Our WIdget Company has the following budgeted information available for the month of May ⢠Sales of 50,000 units and production of 60,000 units. The selling price is $12 per unit. 60% of sales are in cash; 80% of sales on account are collected in the first month and 20% with the remainder the month following. April accounts receivable ending balance is $20,000.
⢠Direct material purchases of $200,000. $175,000 of direct materials will be used in production during the month. All purchases are paid for in cash.
⢠4,000 hours of direct labor at $30 per hour.
⢠Manufacturing overhead of $700,000, including depreciation of $400,000.
⢠SG&A expenses of $400,000, including depreciation of $200,000.
⢠No capital expenditures or dividends.
⢠No beginning inventories or accounts receivable.
What are cash inflows and cash outflows?
a. $552,000; $820,000.
b. $552,000, $1,420,000.
c. $572,000; $795,000.
d. $212,000;$1,420,000.
e. none of the answers is correct.

In each of the cases below, assume division x has a product that can be sold either to outside customers or to division y of the same company for use in its production process. the managers of the divisions are evaluated based on their divisional profits. case a b division x: capacity in units 200,000 200,000 number of units being sold to outside customers 200,000 160,000 selling price per unit to outside customers $ 90 $ 75 variable costs per unit $ 70 $ 60 fixed costs per unit (based on capacity) $ 13 $ 8 division y: number of units needed for production 40,000 40,000 purchase price per unit now being paid to an outside supplier $ 86 $ 74 required: 1. refer to the data in case a above. assume in this case that $3 per unit in variable selling costs can be avoided on intracompany sales. a. what is the lowest acceptable transfer price from the perspective of the selling division? b. what is the highest acceptable transfer price from the perspective of the buying division? c. what is the range of acceptable transfer prices (if any) between the two divisions? if the managers are free to negotiate and make decisions on their own, will a transfer probably take place?