Question
Timekeeper Corporation has two divisions, Distribution and Manufacturing. The company's primary product is highend watches. Each division's costs are provided below: Manufacturing: Variable costs per
Timekeeper Corporation has two divisions, Distribution and Manufacturing. The company's primary product is highend watches. Each division's costs are provided below:
Manufacturing: Variable costs per unit $3.81 Fixed costs per unit $10.45 Distribution: Variable costs per unit $0.70 Fixed costs per unit $1.20 The Distribution Division has been operating at a capacity of 4,008,000 units a week and usually purchases 2,004,000 units from the Manufacturing Division and 2,004,000 units from other suppliers at $13.50 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 120% of full costs? (Round the answer to the nearest cent.)
a. $17.11
b. $14.26
C. $13.50
D. $19.21
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