93) The Denim Division of Jean, Inc. manufactures sweat denim jeans. The zippers used in production are presently purchased from an outside supplier at a cost of $7.00 each. A division of Jean, Inc. called the Zipper Division has just begun producing a similar zipper, which can be used by the Denim Division. Current per unit cost data for the zipper produced by the Zipper Division are as follows:

Direct material$2.20

Direct labour1.60

Variable manufacturing overhead.50

Fixed manufacturing overhead.20

Variable selling expenses.40

Fixed selling expenses.30


a.What is the minimum transfer price that the Zipper Division should charge the Denim Division for each zipper?

b.What is the maximum transfer price that the Denim Division should be willing to pay for each zipper?

94) Explain how the linking of rewards to responsibility centre results affects incentives and risk.

95) The following information is available for the Colwell Company:


Invested capital2,000,000

ROI8 percent


a.capital turnover.

b.net income.

c.income percentage of revenue.

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