Ruter Company
Ruter Company had the following historical accounting data per unit: $$\begin{array} { l l }
\text { Direct materials } & \$ 70 \
\text { Direct labour } & 40 \
\text { Variable overhead } & 25 \
\text { Fixed overhead } & 34 \
\text { Variable selling expenses } & 55 \
\text { Fixed selling expenses } & 19
\end{array}$$ The units are normally transferred internally from Division X to Division Y. The units also may be sold externally for $210 per unit. The minimum profit level accepted by the company is a markup of 30%. There was no beginning or ending inventories.
-Refer to Ruter Company. Suppose Division X uses full cost plus markup. What would be the transfer price?
A) $129.00
B) $136.50
C) $167.00
D) $219.70

Question

Ruter Company
Ruter Company had the following historical accounting data per unit: $$\begin{array} { l l } 
\text { Direct materials } & \$ 70 \
\text { Direct labour } & 40 \
\text { Variable overhead } & 25 \
\text { Fixed overhead } & 34 \
\text { Variable selling expenses } & 55 \
\text { Fixed selling expenses } & 19
\end{array}$$ The units are normally transferred internally from Division X to Division Y. The units also may be sold externally for $210 per unit. The minimum profit level accepted by the company is a markup of 30%. There was no beginning or ending inventories.
-Refer to Ruter Company. Suppose Division X uses full cost plus markup. What would be the transfer price?
A) $129.00
B) $136.50
C) $167.00
D) $219.70

Quizplus · Accepted Answer

The full cost includes direct materials, direct labor, variable overhead, and fixed overhead, totaling $169. Adding a 30% markup results in a transfer price of $219.70.

Ruter Company Ruter Company Had the Following Historical Accounting Data

Ruter Company
Ruter Company Had the Following Historical Accounting Data