British International Has a Division in the United States That

Multiple Choice

British International has a division in the United States that produces tires for automobiles. These tires are transferred to an automobile division in Germany. The tires can be (and are) sold externally in the United States for £60 each. The cost to produce a tire is £40. It costs £3 per tire for shipping and £5 per tire for import duties. When the tires are sold externally, British International spends £2 per tire for commissions and an average of £1 per tire for advertising. An acceptable markup is 30 per cent of costs. What is the transfer price if the cost-plus method is used?

A) £78.00
B) £60.00
C) £84.50
D) £52.00