Timekeeper Corporation has two divisions,Distribution and Manufacturing.The company's primary product is high-end watches.Each division's costs are provided below:
The Distribution Division has been operating at a capacity of 4,010,000 units a week and usually purchases 2,005,000 units from the Manufacturing Division and 2,005,000 units from other suppliers at $15.00 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 transfer is 125% of full costs?
Definitions:
CAPM Approach
A financial model used to determine the expected return on an investment, considering its risk relative to the market using the Capital Asset Pricing Model.
Shareholder Wealth
The value that shareholders gain from their investment in a company, measured by stock prices and dividends.
Project Risk
The uncertainty associated with achieving project objectives within defined constraints such as scope, time, and budget.
Standard Deviation
Standard deviation is a statistical measure that quantifies the amount of variation or dispersion of a set of data values from the mean, often used to assess investment risks.
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