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Author Question: Timekeeper Corporation has two divisions, Distribution and Manufacturing. The company's primary ... (Read 43 times)

123654777

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on: Mar 6, 2021

Question 1

The costs used in cost-based transfer prices ________.
◦ are actual costs
◦ are budgeted costs
◦ can either be actual or budgeted costs
◦ are lower than the market-based transfer prices

Question 2

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$1.87
​Fixed costs per unit$7.29
Distribution:Variable costs per unit$1.40
​Fixed costs per unit$0.60

The Distribution Division has been operating at a capacity of 4,009,000 units a week and usually purchases 2,004,500 units from the Manufacturing Division and 2,004,500 units from other suppliers at $10.00 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 170% of variable costs?
◦ $1.87
◦ $3.18
◦ $3.19
◦ $8.13
Horngren's Cost Accounting: A Managerial Emphasis ¦ Datar, Rajan ¦ 16th Edition
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Marked as best answer by 123654777 on Mar 6, 2021

yuyiding

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Reply #1 on: Mar 6, 2021
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123654777

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Reply 2 on: Mar 6, 2021
Thanks for the timely response, appreciate it

sultansheikh

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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