Naperville Company Has Two Divisions: the Mixing Division and Bottling

Multiple Choice

Naperville Company has two divisions: the Mixing Division and Bottling Division. The Mixing Division sells beverage mix to the Bottling Division. Standard costs for the Mixing Division are as follows:
The Mixing Division uses the following predetermined overhead rate:
What is the transfer price for the beverage mix per gallon based on standard absorption cost plus a markup of 30 percent?

A) $ 5.35
B) $ 6.24
C) $ 8.70
D) $ 4.75