Division X supplies partially completed units of product to division Y. The divisions' negotiated price is $30 plus 20% per unit. Assuming Division X completed and transferred 5,000 units to division Y, the total transfer price on this transaction is:
A) $180,000.
B) $120,000.
C) $50,000.
D) $5,000.

Question

Quizplus · Accepted Answer

The transfer price per unit is $30 plus 20% which is $6, therefore the transfer price for 1 unit is $30 + $6 = $36. 
If Division X completed and transferred 5,000 units, the total transfer price would be $36 x 5,000 = $180,000. Therefore, the correct answer is A.

Division X Supplies Partially Completed Units of Product to Division