Division A has variable manufacturing costs of $50 per unit and fixed costs of $10 per unit.Division A is operating significantly below capacity,what is the optimal transfer price of an internal transfer when the market price is $75?
A)$20
B)$25
C)$50
D)$60
E)$75

Question

Quizplus · Accepted Answer

The optimal transfer price when operating below capacity is typically the variable cost, which is $50 in this case.

Division a Has Variable Manufacturing Costs of $50 Per Unit