The Engine Division Provides Engines for the Tractor Division of a Company

Multiple Choice

The Engine Division provides engines for the Tractor Division of a company. The standard unit costs for the Engine Division are as follows: $\begin{array} { l } \text {Direct materials }&\$600\\ \text {Direct labor }&1,200\\ \text { Variable overhead}&300\\ \text {Fixed overhead }&150\\ \text { Market price per unit}&2,730\\\end{array}$
What is the transfer price based on variable product costs plus 20 percent?

A) $720
B) $2,160
C) $2,100
D) $2,520