The optimal transfer price when there are intermediate markets and the seller is operating at capacity is normally the:
A) full cost.
B) outlay cost.
C) variable cost.
D) market price.

Question

Quizplus · Accepted Answer

When the seller is operating at capacity and there are intermediate markets, the optimal transfer price is typically the market price, as it reflects the opportunity cost of selling internally versus externally.

The Optimal Transfer Price When There Are Intermediate Markets and the Seller