Panther Company had the following historical accounting data per unit: The units are normally transferred internally from Division A to Division B. The units also may be sold externally for $210 per unit. The minimum profit level accepted by the company is a markup of 30 percent. There were no beginning or ending inventories.
What would be the transfer price if Division X uses full cost plus markup?
A) $198.90
B) $167.70
C) $136.50
D) $129.00

Question

Panther Company had the following historical accounting data per unit:  The units are normally transferred internally from Division A to Division B. The units also may be sold externally for $210 per unit. The minimum profit level accepted by the company is a markup of 30 percent. There were no beginning or ending inventories.
What would be the transfer price if Division X uses full cost plus markup?
A) $198.90 
B) $167.70 
C) $136.50 
D) $129.00

Quizplus · Accepted Answer

Full Cost = Total historical accounting data per unit = $120.50
Markup = 30% of Full Cost = $36.15
Transfer Price = Full Cost + Markup = $156.65
Therefore the best choice is B.

Panther Company Had the Following Historical Accounting Data Per Unit