The Machine Division Provides Engines for the ATV Division of a Company.The

question 81

Multiple Choice

The Machine Division provides engines for the ATV Division of a company.The standard unit costs for Machine Division are as follows: $$\begin{array} { l r } \text { Direct materials } & \$ 500 \\\text { Direct labour } & 1,100 \\\text { Variable overhead } & 200 \\\text { Fixed overhead } & 100 \\\text { Market price per unit } & 3,000\end{array}$$ The engine department has excess capacity.What is the best transfer price to avoid transfer price problems?

• A) $300
• B) $900
• C) $1,350
• D) $1,800

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