The Propeller Division provides propellers for the Plane Division of a company. The standard unit costs for the Propeller Division are as follows: $\begin{array}{lr}
\text { Direct materials } & \$ 890 \
\text { Direct labor } & 1,590 \
\text { Variable overhead } & 575 \
\text { Fixed overhead } & 385 \
\text { Market price per unit } & 4,395
\end{array}$
The propeller department has excess capacity. What is the best transfer price to avoid transfer price problems?
A)$2,865
B)$1,340
C)$3,055
D)$955

Question

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The Answer of The Propeller Division provides propellers for the Plane Division of a company. The standard unit costs for the Propeller Division are as follows: $\begin{array}{lr}
\text { Direct materials } & \$ 890 \
\text { Direct labor } & 1,590 \
\text { Variable overhead } & 575 \
\text { Fixed overhead } & 385 \
\text { Market price per unit } & 4,395
\end{array}$
The propeller department has excess capacity. What is the best transfer price to avoid transfer price problems?
A)$2,865
B)$1,340
C)$3,055
D)$955

The Propeller Division Provides Propellers for the Plane Division of a Company