Whitney Company treats each division as a profit center and expects a 20 percent profit on its total production costs.Division A produces a part that it sells externally for $19.00.It also supplies this part to other internal divisions.Its production cost for the part is $13.70.
-What should be the transfer price for the part using the market-price approach?

Question

Quizplus · Accepted Answer

The market-price approach suggests that the transfer price should be the same as the external market price, which is $19.00.

Whitney Company Treats Each Division as a Profit Center and Expects