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​ $1.95   Fixed costs per unit​ $8.17 ​Distribution: Variable costs per unit​ $1.10   Fixed costs per unit​ $1.00   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​ $16.00 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? (Round the answer to the nearest​ cent.)         A. ​$14.05   B. ​$3.89   C. ​$1.95   D. ​$3.12

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
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Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 6PA: Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit...
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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​ $1.95
  Fixed costs per unit​ $8.17
​Distribution: Variable costs per unit​ $1.10
  Fixed costs per unit​ $1.00
 
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​ $16.00 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? (Round the answer to the nearest​ cent.)
 
 
 
 
A.
​$14.05
 
B.
​$3.89
 
C.
​$1.95
 
D.
​$3.12
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