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

question 122

Multiple Choice

The Engine Division provides engines for the Tractor Division of a company. The standard unit costs for the Engine Division are as follows: $\begin{array} { l } \text {Direct materials }&\$600\\ \text {Direct labor }&1,200\\ \text { Variable overhead}&300\\ \text {Fixed overhead }&150\\ \text { Market price per unit}&2,730\\\end{array}$
What is the transfer price based on variable product costs plus 20 percent?

• A)$720
• B)$2,160
• C)$2,100
• D)$2,520

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