Panther Company had the following historical accounting data per unit: $\begin{array}{lr}
\text { Direct materials } & \$ 60 \
\text { Direct labor } & 30 \
\text { Variable overhead } & 15 \
\text { Fixed overhead } & 24 \
\text { Variable selling expenses } & 45 \
\text { Fixed selling expenses } & 9
\end{array}$ 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.
If variable manufacturing costs without a fixed fee are used as the transfer price, Division A's transfer price would be
A)$60.
B)$105.
C)$90.
D)$144.

Question

Quizplus · Accepted Answer

The variable manufacturing costs include direct materials ($60), direct labor ($30), and variable overhead ($15), totaling $105 per unit. Fixed costs are not included in the calculation of a transfer price based on variable costs.

Panther Company Had the Following Historical Accounting Data Per Unit