The Engine Division provides engines for the Tractor Division of a company.The standard unit costs for the Engine Division are:

-
What is the transfer price based on full cost plus a markup of 35%?

A) $3,375
B) $585
C) $2,760
D) $2,730

Question

The Engine Division provides engines for the Tractor Division of a company.The standard unit costs for the Engine Division are:

-
What is the transfer price based on full cost plus a markup of 35%?

A) $3,375 
B) $585 
C) $2,760 
D) $2,730

Quizplus · Accepted Answer

SUPPORTING CALCULATIONS:
Transfer price based on full cost plus a markup of 35% = Full cost* + (Full cost* × Markup percentage) = $2,500 + ($2,500 × 35%) = $2,500 + $875 = $3,375
*Full cost = (Direct materials + Direct labor + Variable overhead + Fixed overhead) = ($650 + $1,250 + $400 + $200) = $2,500

The Engine Division Provides Engines for the Tractor Division of a Company.The