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What is the transfer price

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Question - Canvas Company manufactures one type of camping tent tarp. Canvas Co. has two divisions: Stitching and the Finishing. The Stitching Division manufactures tarps for the Finishing Division, which completes the tarp and sells it to retailers. Stitching "sells" tarps internally to Finishing. Stitching is operating at full capacity. Finishing is operating at 80% of capacity. The market price for finished tent tarps is $42.

Stitching's costs per tarp are:

Direct materials $10

Direct labor $8

Variable overhead $6

Division fixed costs $4

Finishing's costs per completed tarp are:

Direct materials $14

Direct labor $6

Variable overhead $4

Division fixed costs $16

Required - If Canvas Co. uses an internal transfer price policy of transfer prices are 180% of variable costs, what is the transfer price?

Reference no: EM133157715

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