Timekeeper Corporation has twodivisions, Distribution and Manufacturing. Thecompany's primary product is highend watches. Eachdivision's costs...
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Accounting
Timekeeper Corporation has twodivisions, Distribution and Manufacturing. Thecompany's primary product is highend watches. Eachdivision's costs are providedbelow:
Manufacturing:
Variable costs per unit $3.25
Fixed costs per unit $5.88
Distribution:
Variable costs per unit $1.10
Fixed costs per unit $1.20
The Distribution Division has been operating at a capacity of 4,001,000 units a week and usually purchases 2,000,500 units from the Manufacturing Division and 2,000,500 units from other suppliers at $16.00 per unit.
What is the transfer price per watch from the Manufacturing Division to the DistributionDivision, assuming the method used to place a value on each watch is 160% of variablecosts?
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