Division A has variable manufacturing costs of $53 per unit and fixed costs of $14 per...

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Division A has variable manufacturing costs of $53 per unit and fixed costs of $14 per...

Division A has variable manufacturing costs of $53 per unit and fixed costs of $14 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 $80?

$28.
$27.
$53.
$67.
(Pt 2) Division B has variable manufacturing costs of $58 per unit and fixed costs of $14 per unit. Assuming that Division B is operating significantly below capacity, what is the opportunity cost of an internal transfer when the market price is $88?
$0.
$30.
$58.
$72.

business accounting

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Answer 1

Answer #1

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Answer #1
Correct Answer = Option #3: $ 53
Since the division is operating below capacity, the optimal transfer price will be equal to variable manufacturing cost.
Answer #2
Correct Answer = Option #1: $ 0
Since the division is operating below capacity, opportunity cost will be $ 0.

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Answer 2

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