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Division R sells one of its products to division S in the same group. The...

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Accounting

Division R sells one of its products to division S in the same group. The product cost consists of $160 for materials, $60 for direct labour, $10 for variable overhead and $110 for fixed overhead. R division sets its profit margin equal to 40% of the variable cost. What is the ideal transfer price if R is operating at less than full capacity?

Select one:

a. $230

b. $160

c. $432

d. $340

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