Gunnison Furniture had the following historical accounting data, per hundred board feet, concerning one of its products: The shelving is normally transferred internally from the Cutting Division to the Finishing Division. It also may be sold externally for $110 per hundred board feet. The minimum profit level accepted by the company is a markup of 20 percent.
If the negotiated price is used, Gunnison Furniture's transfer price should be a
A) maximum of $100.80.
B) minimum of $84.00.
C) minimum of $80.00.
D) maximum of $110.00.

Question

Gunnison Furniture had the following historical accounting data, per hundred board feet, concerning one of its products:  The shelving is normally transferred internally from the Cutting Division to the Finishing Division. It also may be sold externally for $110 per hundred board feet. The minimum profit level accepted by the company is a markup of 20 percent.
If the negotiated price is used, Gunnison Furniture's transfer price should be a
A) maximum of $100.80. 
B) minimum of $84.00. 
C) minimum of $80.00. 
D) maximum of $110.00.

Quizplus · Accepted Answer

The Answer of Gunnison Furniture had the following historical accounting data, per hundred board feet, concerning one of its products:  The shelving is normally transferred internally from the Cutting Division to the Finishing Division. It also may be sold externally for $110 per hundred board feet. The minimum profit level accepted by the company is a markup of 20 percent.
If the negotiated price is used, Gunnison Furniture's transfer price should be a
A) maximum of $100.80. 
B) minimum of $84.00. 
C) minimum of $80.00. 
D) maximum of $110.00.

Gunnison Furniture Had the Following Historical Accounting Data, Per Hundred