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Clearview Window Company manufactures windows for the home-building industry. The window frames are produced in the Frame Division. The frames are then transferred to the Glass Division, where the glass and hardware are installed. The companys best-selling product is a three-by-four-foot, doublepaned operable window. The Frame Division also can sell frames directly to custom home builders, who install the glass and hardware. The sales price for a frame is $180. The Glass Division sells its finished windows for $450. The markets for both frames and finished windows exhibit perfect competition. The standard variable cost of the window is detailed as follows:

	Frame Division					Glass Division
Direct material		$	37				$	71	*
Direct labor			32					37
Variable overhead			71					71
Total		$	140				$	179

*Not including the transfer price for the frame.

1a. Use the general rule to compute the transfer price for window frames and calculate the transfer price if it is based on standard variable cost with a 10 percent markup

1b. Assume that there is excess capacity in the Frame Division. Use the general rule to compute the transfer price for window frames. 1c. Suppose the predetermined fixed-overhead rate in the Frame Division is 125 percent of direct-labor cost. Calculate the transfer price if it is based on standard full cost plus a 10 percent markup. 1d. The Glass Division has been approached by the U.S. Army with a special order for 1,700 windows at $359. Assume the transfer price established in requirement 2-c. above is being used. What is the incremental contribution (loss) per window for Clearview Window Company as a whole if this special order is accepted? 1e. The Glass Division has been approached by the U.S. Army with a special order for 1,700 windows at $359. Assume the transfer price established in requirement 2-c. above is being used. What is the incremental contribution (loss) per window for the Glass Division if this special order is accepted?

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