Figure 20-7
the Engine Division Provides Engines for the Tractor

Multiple Choice

Figure 20-7
The Engine Division provides engines for the Tractor Division of a company. The standard unit costs for Engine Division are as follows: $\begin{array}{lr}\text { Direct materials } & £ 600 \\\text { Direct labour } & 1,200 \\\text { Variable overhead } & 300 \\\text { Fixed overhead } & 150 \\\text { Market price per unit } & 2,730\end{array}$
-Refer to Figure 20-7. The engine department has excess capacity. What is the best transfer price to avoid transfer price problems?

A) £1,350
B) £300
C) £900
D) £2,100