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

To calculate the transfer price using full cost plus markup, we need to add the full cost per unit (direct materials, direct labor, and overhead) to the desired markup percentage. The full cost per unit is calculated as follows: 
Direct materials + Direct labor + Overhead = $50 + $30 + $60 = $140 per unit.

Adding the desired markup percentage of 30% to the full cost per unit gives us: 
$140 * 1.30 = $182 per unit.

Therefore, the transfer price using full cost plus markup would be $182 per unit.

Panther Company Had the Following Historical Accounting Data Per Unit