Division B has variable manufacturing costs of $50 per unit and fixed costs of $10 per unit.Division B is operating significantly below capacity,what is the opportunity cost of an internal transfer when the market price is $75?
A)$0
B)$25
C)$50
D)$60
E)$75

Question

Quizplus · Accepted Answer

When operating below capacity, the opportunity cost of an internal transfer is $0 because there is no lost opportunity to sell to an external market.

Division B Has Variable Manufacturing Costs of $50 Per Unit