A home office ships inventory costing $40,000 to its branch at a transfer price of $50,000. The markup percentage (rounded) using the branch's cost basis is

Name: A home office ships inventory costing $40,000 to its branch at a transfer price of $50,000. The markup percentage (rounded) using the branch's cost basis is
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Quizplus · Accepted Answer

The markup percentage based on the branch's cost basis is calculated as (Transfer Price - Cost) / Cost. Here, it is ($50,000 - $40,000) / $40,000 = $10,000 / $40,000 = 0.25 or 25%.

A Home Office Ships Inventory Costing $40,000 to Its Branch