Answer the Following Questions Using the Information Below:
Branded Shoe

question 92

Multiple Choice

Answer the following questions using the information below:
Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching Division and the Polishing Division. The Stitching Division manufactures shoes for the Polishing Division, which completes the shoe and sells it to retailers. The Stitching Division "sells"shoes to the Polishing Division. The market price for the Polishing Division to purchase a pair of shoes is $42. (Ignore changes in inventory.) The fixed costs for the Stitching Division are assumed to be the same over the range of 40,000-100,000 units. The fixed costs for the Polishing Division are assumed to be $14 per pair at 100,000 units.
Stitching's costs per pair of soles are:
$\begin{array} { l l } \text { Direct materials } & \$ 10 \\ \text { Direct labor } & \$ 8 \\ \text { Variable overhead } & \$ 6 \\ \text { Division fixed costs } & \$ 4 \end{array}$
Polishing's costs per completed pair of shoes are:
$\begin{array} { l l } \text { Direct materials } & \$ 14 \\ \text { Direct labor } & \$ 6 \\ \text { Variable overhead } & \$ 4 \\ \text { Division fixed costs } & \$ 16 \end{array}$
-What is the transfer price per pair of shoes from the Stitching Division to the Polishing Division if the method used to place a value on each pair of shoes is 180% of variable costs?

• A) $18.00
• B) $32.40
• C) $43.20
• D) $57.60

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Definitions:

Embryonic Plant

A stage in plant development where the embryo forms within the seed, eventually growing into a new plant.

Aggregate Fruits

Fruits that form from the merger of several ovaries that were separate in a single flower, resulting in a cluster of fruits.

Multiple Fruits

Fruits that form from the ovaries of many flowers growing closely together, as seen in figs, pineapples, and mulberries.

Simple Fruits

Fruits that develop from a single ovary of a single flower and are generally composed of the ovary wall and seeds.