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

question 6

Multiple Choice

The Engine Division provides engines for the Tractor Division of a company. The standard unit costs for Engine Division are as follows: The engine department has excess capacity. What is the best transfer price to avoid transfer price problems?

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

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Definitions:

Customer Account

An account maintained by a business for each customer to track transactions, balances, and other relevant information.

Supplier's Account

An account kept by a business to record transactions (like purchases and payments) related to a specific supplier.

Purchases Journal

A specialized accounting journal used to record all purchases of merchandise, inventory, and other supplies on credit.

Life Vests

Safety devices designed to keep an individual afloat in water and reduce the risk of drowning.