Question

Calculating Transfer Price Burt Inc. has a number of divisions, including the Indian Division, a producer of liquid pumps, and Maple Division, a manufacturer of boat engines. Indian Division produces the h20-model pump that can be used by Maple Division in the production of motors that regulate the raising and lowering of the boat engine's stern drive unit. The market price of the h20-model is $720, and the full cost of the h20-model is $540. Required: 1. If Burt has a transfer pricing policy that requires transfer at full cost, what will the transfer price be? $

Answer 1

The transfer price is $540

Step-by-step explanation:

Since the transfer pricing policy of Burt stipulates that transfers should be made at full cost and the full cost is $540, thus, the transfer price is $540.

Answer 2

The transfer price according to Burt Inc.'s policy, which requires transferring at full cost, would be $540 for the h20-model pump.

Step-by-step explanation:

The subject in question involves transfer pricing, which is a concept used in managerial and cost accounting. In the scenario provided, Burt Inc.'s internal transfer pricing policy requires transfers at full cost. Therefore, the transfer price that the Indian Division would charge the Maple Division for the h20-model pump would be the full cost of the product. If Burt Inc. has a transfer pricing policy that requires transfer at full cost, then the transfer price for the h20-model pump will be the full cost of $540.

As stated: "The full cost of the h20-model is $540." This means that the transfer price from the Indian Division to Maple Division should be $540.