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
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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 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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