The Machine Division provides engines for the ATV Division of a company.The standard unit costs for Machine Division are as follows: $$\begin{array} { l r }
\text { Direct materials } & \$ 500 \
\text { Direct labour } & 1,100 \
\text { Variable overhead } & 200 \
\text { Fixed overhead } & 100 \
\text { Market price per unit } & 3,000
\end{array}$$ The engine department has excess capacity.What is the best transfer price to avoid transfer price problems?
A) $300
B) $900
C) $1,350
D) $1,800

Question

The Machine Division provides engines for the ATV Division of a company.The standard unit costs for Machine Division are as follows: $$\begin{array} { l r } 
\text { Direct materials } & \$ 500 \
\text { Direct labour } & 1,100 \
\text { Variable overhead } & 200 \
\text { Fixed overhead } & 100 \
\text { Market price per unit } & 3,000
\end{array}$$ The engine department has excess capacity.What is the best transfer price to avoid transfer price problems?
A) $300
B) $900
C) $1,350
D) $1,800

Quizplus · Accepted Answer

The Answer of The Machine Division provides engines for the ATV Division of a company.The standard unit costs for Machine Division are as follows: $$\begin{array} { l r } 
\text { Direct materials } & \$ 500 \
\text { Direct labour } & 1,100 \
\text { Variable overhead } & 200 \
\text { Fixed overhead } & 100 \
\text { Market price per unit } & 3,000
\end{array}$$ The engine department has excess capacity.What is the best transfer price to avoid transfer price problems?
A) $300
B) $900
C) $1,350
D) $1,800

The Machine Division Provides Engines for the ATV Division of a Company.The