If the lowest acceptable transfer price from the viewpoint of the selling division is $75 and the opportunity cost per unit on outside sales is $24, then the variable cost per unit must be:
A) $24 per unit
B) $99 per unit
C) $51 per unit
D) $75 per unit

Question

Quizplus · Accepted Answer

From the perspective of the selling division, profits would increase as a result of the transfer if and only if:
Transfer price > Variable cost per unit + Opportunity cost per unit = $75 per unit
Variable cost per unit + $24 per unit = $75 per unit
Variable cost per unit = $75 per unit - $24 per unit = $51 per unit

If the Lowest Acceptable Transfer Price from the Viewpoint of the Selling