Signature Scents has two divisions: the Cologne Division and the Bottle Division. The Bottle Division produces containers that can be used by the Cologne Division. The Bottle Division's variable manufacturing cost is $2, shipping cost is $0.10, and the external sales price is $3. No shipping costs are incurred on sales to the Cologne Division, and the Cologne Division can purchase similar containers in the external market for $2.60. Assume the Bottle Division has no excess capacity and could sell everything it produced externally. Using the general rule, the transfer price from the Bottle Division to the Cologne Division would be: a. $2.00. b. $2.10. c. $2.60. d. $2.90. e. $3.00.
Signature Scents has two divisions: the Cologne Division and the Bottle Division. The Bottle Division produces containers that can be used by the Cologne Division. The Bottle Division's variable manufacturing cost is $2, shipping cost is $0.10, and the external sales price is $3. No shipping costs are incurred on sales to the Cologne Division, and the Cologne Division can purchase similar containers in the external market for $2.60. Assume the Bottle Division has no excess capacity and could sell everything it produced externally. Using the general rule, the transfer price from the Bottle Division to the Cologne Division would be: a. $2.00. b. $2.10. c. $2.60. d. $2.90. e. $3.00.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 4CMA: Morrisons Plastics Division, a profit center, sells its products to external customers as well as to...
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Please provide correct answer general account not use aii

Transcribed Image Text:Signature Scents has two divisions: the Cologne Division and the Bottle Division. The
Bottle Division produces containers that can be used by the Cologne Division. The
Bottle Division's variable manufacturing cost is $2, shipping cost is $0.10, and the
external sales price is $3. No shipping costs are incurred on sales to the Cologne
Division, and the Cologne Division can purchase similar containers in the external
market for $2.60.
Assume the Bottle Division has no excess capacity and could sell everything it
produced externally. Using the general rule, the transfer price from the Bottle Division
to the Cologne Division would be:
a. $2.00.
b. $2.10.
c. $2.60.
d. $2.90.
e. $3.00.
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