Timekeeper Corporation Has Two Divisions,Distribution and Manufacturing

question 103

Multiple Choice

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 4,009,000 units a week and usually purchases 2,004,500 units from the Manufacturing Division and 2,004,500 units from other suppliers at $13.00 per unit.
Assume 110,000 units are transferred from the Manufacturing Division to the Distribution Division for a transfer price of $8.00 per unit.The Distribution Division sells the 110,000 units at a price of $18 each to customers.What is the operating income of both divisions together?

• A)$347,600
• B)$392,150
• C)$997,700
• D)$634,700

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