The Jordan Company has two divisions and manufactures one type of watch. The two divisions are the production Division and the Package & Delivery Division. The production Division manufactures watches and then sells them to the Package & Delivery Division, which packs the watches and sells them to retailers. The market price for the Package & Delivery Division to purchase this watch is £40.

Production’s cost per watch are:	£
Direct materials	6
Direct labour	7
Variable overhead	5
Division fixed cost	2

Package & Delivery’s cost per watch are:	£
Direct materials	9
Direct labour	3
Variable overhead	4
Division fixed cost	16

Notes: Fixed costs shown above are per pair for 100,000 units.

Required:

What is the operating income for Jordan company?

Answer rating: 100% (QA)

Cost for package and delivery division 40 per unit ... View the full answer