Timekeeper Corporation has two divisions, Distribution and Manufacturing. The company's primary product is high−end watches. Each division's costs are provided below: Manufacturing: Variable costs per unit $3.45 Fixed costs per unit $9.85 Distribution: Variable costs per unit $0.70 Fixed costs per unit $0.50 The Distribution Division has been operating at a capacity of 4,003,000units a week and usually purchases 2,001,500 units from the Manufacturing Division and 2,001,500 units from other suppliers at $15.50 per unit. What is the transfer price per watch from the Manufacturing Division to the Distribution Division, assuming the method used to place a value on each transfer is 125% of full costs? A. $20.15 B. $16.63 C. $15.50 D. $13.30
Timekeeper Corporation has two divisions, Distribution and Manufacturing. The company's primary product is high−end watches. Each division's costs are provided below: Manufacturing: Variable costs per unit $3.45 Fixed costs per unit $9.85 Distribution: Variable costs per unit $0.70 Fixed costs per unit $0.50 The Distribution Division has been operating at a capacity of 4,003,000units a week and usually purchases 2,001,500 units from the Manufacturing Division and 2,001,500 units from other suppliers at $15.50 per unit. What is the transfer price per watch from the Manufacturing Division to the Distribution Division, assuming the method used to place a value on each transfer is 125% of full costs? A. $20.15 B. $16.63 C. $15.50 D. $13.30
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Timekeeper Corporation has two divisions, Distribution and Manufacturing. The company's primary product is
high−end
watches. Each division's costs are provided below: Manufacturing: Variable costs per unit $3.45
Fixed costs per unit $9.85
Distribution: Variable costs per unit $0.70
Fixed costs per unit $0.50
The Distribution Division has been operating at a capacity of 4,003,000units a week and usually purchases 2,001,500 units from the Manufacturing Division and 2,001,500 units from other suppliers at $15.50 per unit.
What is the transfer price per watch from the Manufacturing Division to the Distribution Division, assuming the method used to place a value on each transfer is 125% of full costs?
A.
$20.15
$16.63
$15.50
$13.30
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