Holmes,Inc.has a division that manufactures a component that sells for $150 and has a variable cost of $45.Another division of the company wants to purchase the component.Fixed cost per unit of the component is $20.What is the transfer price if the division is operating at full capacity?
A)$65
B)$170
C)$150
D)$20

Question

Quizplus · Accepted Answer

When operating at full capacity, the transfer price should be set at the market price, which is $150 in this case.