Machine Division
Machine Division Provides Engines for the ATV Division

question 28

Multiple Choice

Machine Division
Machine Division provides engines for the ATV Division of a company. The standard unit costs for Machine Division are as follows: $$\begin{array} { l l } \text { Direct materials } & \$ 500 \\\text { Direct labour } & 1,100 \\\text { Variable overhead } & 200 \\\text { Fixed overhead } & 100 \\\text { Market price per unit } & 3,000\end{array}$$ The Machine Division has excess capacity.
-Refer to Machine Division. 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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Definitions:

Accounts Payable

Liabilities of a business that represent money owed to suppliers or creditors for goods and services received.

Accounts Payable Subsidiary Ledger

A detailed record used to track amounts owed to suppliers or creditors separate from the general ledger.

General Ledger

A comprehensive ledger that contains all the financial accounts of a business, recording every transaction that occurs.

Accounts Receivable Subsidiary Ledger

A detailed ledger that tracks individual transactions with customers, supporting the summary balances shown in the main accounts receivable account.