The Following Costs Exist for the Wiring Division of Coriander

question 77

Essay

The following costs exist for the Wiring Division of Coriander Corporation:
$$\begin{array} { l l } \text { Direct materials } & \$ 67,500 \\\text { Direct labor } & 45,000 \\\text { Manufacturing overhead (25\% variable) } & 45,000 \\\text { Operating expenses (30\% variable) } & 75,000 \\\text { Output } & 30,000 \text {units }\end{array}$$
The output of the Wiring Division, which sells for $10 per unit externally, is used by the Electrical Harness Division.
Required:
Compute the transfer price for a unit of the Wiring Division's output using:
a) market price.
b) variable production cost plus 30%.
c) absorption cost plus 25%.
d) variable cost.
e) total cost plus 10%.

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