Polly Woodside Maritime Division Purchases from an Outside Supplier for $52

question 12

Multiple Choice

Polly Woodside Maritime Division purchases from an outside supplier for $52 per unit. The company's Shore Division, which has excess capacity, makes and sells the same part for external customers at a variable cost of $38 and a selling price of $58. If Shore Division commences sales to Maritime Division it will (1) use the general rule and (2) be able to reduce the variable cost on internal transfers by $4. If external sales are not affected, Shore Division should establish a transfer price of:

• A) $34
• B) $38
• C) $58
• D) None of the given answers

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