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

question 106

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.What is the transfer price based on variable product costs plus 20 percent?

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