C
The most common incorrect answer was C and this was the answer given by a majority of candidates. This was found by taking the contribution per unit for Y of $320 and simply adding it to the variable cost per unit of $270 of X, thus giving $590. However, this ignored the fact that X takes 1.5 times as long to make as Y and therefore either the contribution per labour hour must be calculated and multiplied up by 6 as shown above, or the contribution per unit of $320 must be multiplied by 1.5 before adding it to the variable cost of $270.

A
$270 is simply the marginal cost of producing X. This is incorrect as the opportunity cost approach requires you to add the lost contribution to this figure too.

D
$840 is the correct figure of $750 calculated but with the apportioned fixed overheads of $90 added on too.
This is incorrect as the minimum transfer price is marginal cost only + opportunity cost. Apportioned fixed costs are therefore ignored.