Medlock Company has two divisions, Wheel and Chassis. The Wheel Division manufactures a wheel assembly that the Chassis ivision uses. The variable cost to produce this assembly is $6.00 per unit; full cost is $7.00. The component sells on the open market or $13.00

Medlock Company has two divisions, Wheel and Chassis. The Wheel Division manufactures a wheel assembly that the Chassis ivision uses. The variable cost to produce this assembly is $6.00 per unit; full cost is $7.00. The component sells on the open market or $13.00

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Medlock Company has two divisions, Wheel and Chassis. The Wheel Division manufactures a wheel assembly that the Chassis
Division uses. The variable cost to produce this assembly is $6.00 per unit; full cost is $7.00. The component sells on the open market
for $13.00.
What will the transfer price be if Medlock uses a pricing rule of variable cost plus 50 percent?
Note: Round your answer to 2 decimal places.
Transfer price i

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