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 $3.81 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
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 $3.81 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
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
Problem 4CE
Related questions
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 $3.81
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
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT