Calculating Transfer Price

Jelkin Corporation is a processor of apples. The manufacturing facility has two divisions: the puree division and the finishing division. As

apples arrive at the facility, the puree division cleans and purees the apples into a smooth sauce. The apple sauce may be packaged in the

puree division and sold on the wholesale market for $$22$ a batch, or transferred to the finishing division where it is packaged in glass jars

and sold to grocery stores for $$35$ per batch. Jelkin is able to produce $400,000$ batches per year and reports the following costs per batch:

Required:

What is the minimum transfer price the puree division manager would accept?

$

What is the maximum transfer price the finishing division would accept?

$ Assuming the $400,000$ batches are transferred to the finishing division, compute the operating income for each division using:

$($a$)$ market price for the transfer price. Round your answers to two decimal places, if necessary.

i$.$ Puree Division Operating Income.

Jelkin Corporation

Puree Division Operating Income ii$.$ Finishing Division Operating Income.

Jelkin Corporation

Finishing Division Operating Income $($b$)$ full manufacturing cost plus $10$ percent for the transfer price. Round your answers to two decimal places, if necessary.

i$.$ Puree Division Operating Income.

Jelkin Corporation

Puree Division Operating Incomeii. Finishing Division Operating Income.

Jelkin Corporation

Finishing Division Operating Income