Two investment centers of Jones Products Company are the Electronics Division and the Appliance Division. The Electronics Division manufactures an electronic computer chip that can be sold externally and is also used by the Appliance Division in making motors for its appliances. The following information is available about the computer chip: Total production annually: 200,000 units; internal requirements: 150,000 units; all others are sold externally List selling price: $25.60 Variable production costs: $12 Fixed overhead: $300,000; allocated on the basis of units of production Variable selling costs: $3; includes $1 per unit in advertising cost Fixed selling costs: $400,000 Determine the transfer price under each of the following methods:
a. Total variable cost
b. Full production cost
c. Total variable production cost plus necessary selling costs
d. Market price
