Cost-based transfer prices The McClurey Company operates a decentralized manufac- turing business. The company's main product is electric winches mounted on the front of trucks and other vehicles used primarily by farmers and outdoorsmen. Several different divisions manufacture components of the winch and transfer them to the Assembly Division where the units are assembled and transferred to finished goods inventory. The Housing Division manufac- tures cast iron housing for the winches. There is no market price for the specific housing manufactured in the division, and the company has used a variety of cost-based transfer prices through the years. Standards have been developed for the production of housings, and below are standard and actual cost data for the Housing Division for the fiscal year ending March 31,1992.

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Standard Actual Production quantity 10,000 10,000 Direct materials $150,000 $190,000 Direct labor... 120,000 150,000 Manufacturing overhead 180,000 190,000 Administration 130,000 Marketing and distribution 80,000