Mining Company mines quartz rock at a site in the Boise Basin and then crushes
the quartz rock to obtain the gold. Following is information relative to the
operation for the month of July 2013:
mined 10,000 cubic yards of rock. There is a market for the rock before
Market Price Per cubic yard $10 $50
Variable cost per cubic yard $5 $10
Fixed cost per cubic yard $2 $20
1.Compute the transfer price using
full cost and calculate the operating income for each operation.
2.Compute the transfer price using
variable cost and calculate the operating income for each operation.