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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
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 $2.94 Fixed costs per unit $11.92 Distribution: Variable costs per unit $0.90 Fixed costs per unit $0.70 The Distribution Division has been operating at a capacity of 4,007,000 units a week and usually purchases 2,003,500 units from the Manufacturing Division and 2,003,500 units from other suppliers at $13.00 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 watch is 160% of variable costs? A. $2.94 B. $10.06 C. $4.70 D. $5.61
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