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

question 20

Multiple Choice

The Engine Division provides engines for the Tractor Division of a company. The standard unit costs for Engine Division are as follows:
$$\begin{array} { l r } \text { Direct materals }&\$600 \\\text { Direct labour } & 1,200 \\\text { Variable overhead } & 300 \\\text { Fixed overhead } & 150 \\\text { Market price per unit } & 2,730\end{array}$$
-Refer to the figure. The Engine Division has excess capacity.What is the best transfer price to avoid transfer price problems?

• A)$300
• B)$900
• C)$1,350
• D)$2,100

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Definitions:

Synthetic Marble

A man-made material designed to mimic the appearance of natural marble, commonly used in construction and decorative applications.

Statutory Process

A formal procedure or series of steps established by statute (law) that organizations, governments, or individuals must follow.

Common Law

A legal system based on precedent and court rulings, as opposed to statutes or written legislation, forming a major part of the law in many English-speaking countries.

Statutory Assignment

The transfer of a legal right from one person to another pursuant to specific statutes.