Evergreen Corp.has two divisions,Fern and Bark.Fern produces a widget that Bark could use in the production of units that cost $175 in variable costs,plus the cost of the widget,to manufacture.Fern's variable costs are $60 per widget,and fixed manufacturing costs are applied at a rate of $36 per widget.Widgets sell on the open market for $105 each.Evergreen's policy is that internal transfers will be made at variable cost.If Bark purchases the widgets from Fern,what will be the transfer price?
A)$60
B)$96
C)$100
D)$175

Question

Quizplus · Accepted Answer

The transfer price will be $60, as Evergreen's policy is that internal transfers are made at variable cost, and Fern's variable cost per widget is $60.