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 Engine Division are as follows:
$$\begin{array} { l r } \text { Direct materals }&\$600 \\\text { Direct labour } & 1,200 \\\text { Variable overhead } & 300 \\\text { Fixed overhead } & 150 \\\text { Market price per unit } & 2,730\end{array}$$
-Refer to the figure. The Engine Division has excess capacity.What is the best transfer price to avoid transfer price problems?

A) $300
B) $900
C) $1,350
D) $2,100