Question

Assume the transfer price for a pair of soles is​ 150% of total costs of the Sole Division and​ 40,000 of soles are produced and transferred to the Assembly Division. The Sole​ Division's operating income is

​A.$260,000.
B.$300,000.
C.$250,000.
D.​$400,000.
E.​$248,000.

Answer 1

The student's question about the operating income for the Sole Division cannot be answered as it lacks the necessary total cost information to perform the calculation.

Step-by-step explanation:

The given question asks to determine the operating income of a Sole Division given the data on transfer pricing, number of units produced, and transferred. In order to calculate the operating income, we need to know what the total costs are, which haven't been provided in the question.

Assuming we had the total cost per unit, we would multiply the cost by 150% to get the transfer price, and then multiply the transfer price by the number of units (40,000) to find total revenues. Operating income would then be total revenues minus total costs. Without the cost information, we cannot calculate the operating income, hence the question cannot be answered with the information provided.