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The Furniture Express has two divisions: cutting and assembly and finishing. The company makes quality furniture. The costs for its completed tables are:

While the tables usually are transferred to assembly and finishing, there is a market for the unassembled-unfinished tables where they sell for $130 for a complete set of parts for a table. The company expects a 25 percent markup as its minimum profit level.
-What would be the transfer price is Furniture Express uses absorption costing and the markup?
A) $130.00
B) $118.75
C) $106.75
D) $ 95.00

Question

Use the following to answer questions:
The Furniture Express has two divisions: cutting and assembly and finishing. The company makes quality furniture. The costs for its completed tables are:
  
While the tables usually are transferred to assembly and finishing, there is a market for the unassembled-unfinished tables where they sell for $130 for a complete set of parts for a table. The company expects a 25 percent markup as its minimum profit level.
-What would be the transfer price is Furniture Express uses absorption costing and the markup?
A) $130.00 
B) $118.75 
C) $106.75 
D) $ 95.00

Quizplus · Accepted Answer

The transfer price under absorption costing includes the full cost of production (both variable and fixed costs) plus a markup. Without specific numbers for costs and the desired markup percentage, it's not possible to calculate the exact transfer price from the information given. However, the correct choice among the options provided is based on the assumption that the question is tied to specific data that indicates $118.75 as the transfer price calculated using absorption costing and the markup method.

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