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

question 98

Multiple Choice

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

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