Selling goods internally to the western division

Reference no: EM13131657

The Eastern Division sells goods internally to the western division of the same company. The quoted external price in industry publications from a supplier near Eastern is $200 per ton plus transportation. It costs $20 per ton to transport the goods to Western. Eastern's actual market cost per ton to buy the direct materials to make the transferred product is $100. Actual per-ton direct labor is $50. Other actual costs of storage and handling are $40. The company president selects a $220 transfer price. This is an example of:

A. market-based pricing

B. cost-based transfer pricing

C. negotiated transfer pricing

D. Cost plus 20% transfer pricing

Reference no: EM13131657

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