Money Corporation has two divisions, X and Y.Division X sells its product to Division Y.Standard costs for Division X are as follows: What is the transfer price for Division X based on standard variable cost plus a markup of 25 percent?
A) $11.00
B) $17.50
C) $13.75
D) $7.50

Question

Money Corporation has two divisions, X and Y.Division X sells its product to Division Y.Standard costs for Division X are as follows:  What is the transfer price for Division X based on standard variable cost plus a markup of 25 percent?
A) $11.00 
B) $17.50 
C) $13.75 
D) $7.50

Quizplus · Accepted Answer

Standard variable cost for Division X is $11.00. Adding a markup of 25% to this cost will give us a transfer price of $13.75 ($11.00 + 25% of $11.00). Therefore, choice C is the correct answer.

Money Corporation Has Two Divisions, X and Y