Division A has variable manufacturing costs of $57 per unit and fixed costs of $12 per...

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Division A has variable manufacturing costs of $57 per unit and fixed costs of $12 per...

Division A has variable manufacturing costs of $57 per unit and fixed costs of $12 per unit. Assuming that Division A is operating significantly below capacity, what is the optimal transfer price of an internal transfer when the market price is $82?

Multiple Choice

$25.
$57.
$69.
$24.

business accounting

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Answer 1

Answer #1

Since Division A's Operating capacity is Significantly below the capacity limit, It can price the internal transfer at a minimum of variable cost. As fixed cost is irrelevant since it was sunk cost.

So optimal transfer price of an internal transfer is $ 57/.

Answer is $ 57/.

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Answer 2

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Division A has variable manufacturing costs of $57 per unit and fixed costs of $12 per...

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Add Answer to: Division A has variable manufacturing costs of $57 per unit and fixed costs of $12 per...

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Division A has variable manufacturing costs of $57 per unit and fixed costs of $12 per...