Hasslehoff Inc., is a multinational company with divisions around the world.Division A in the United States purchases a part from Division G in Canada.There is no outside market for the part because it is used to manufacture another product.The manufacturing cost for the part is $5.Transportation is $1 and commissions are $.5 but do not need to be paid. What is the transfer price using the cost-plus method?
A) $5.50
B) $6.50
C) $5
D) $6

Question

Quizplus · Accepted Answer

The transfer price using the cost-plus method would include the manufacturing cost and transportation, but not commissions since they do not need to be paid. Thus, $5 (manufacturing cost) + $1 (transportation) = $6.