imekeeper Corporation has two divisions, Distribution and Manufacturing. The com
ID: 2589739 • Letter: I
Question
imekeeper Corporation has two divisions, Distribution and Manufacturing. The company's primary product is highminusend watches. Each division's costs are provided below: Manufacturing: Variable costs per unit $ 1.28$1.28 Fixed costs per unit $ 11.58$11.58 Distribution: Variable costs per unit $ 0.80$0.80 Fixed costs per unit $ 1.10$1.10 The Distribution Division has been operating at a capacity of 4 comma 005 comma 0004,005,000 units a week and usually purchases 2 comma 002 comma 5002,002,500 units from the Manufacturing Division and 2 comma 002 comma 5002,002,500 units from other suppliers at $ 13.00$13.00 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 165165% of variable costs?
Explanation / Answer
he transfer price per watch from the Manufacturing Division to the Distribution Division is
1.28*165% = 2.112
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