The Chasis Division Provides Frames for the Tractor Division of a Company

question 42

Multiple Choice

The Chasis Division provides frames for the Tractor Division of a company. The standard unit costs for the Chasis Division are as follows: $\begin{array} { l } \text {Direct materials }&\$800\\ \text { Direct labor}&1,500\\ \text {Variable overhead }&40\\ \text {Fixed overhead }&350\\ \text { Market price per unit}&4,575\\\end{array}$
What is the transfer price based on full cost plus a markup of 20 percent?

• A)$5,490
• B)$4,575
• C)$3,240
• D)$3,660

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