What would be a legitimate reason for upper management to insist on an internal transfer even though the product could be sourced outside the company at a price that is lower than the company's variable cost?
A)Management is concerned that its manufacturing equipment will soon be obsolete, and it wants to get full use out of it before it happens.
B)Management wants to ensure a secure supply of the product.
C)The company has excess capacity.
D)There is never a legitimate reason that justifies an internal transfer if a product can be sourced outside the company at a price that is lower than the company's variable cost.

Question

Quizplus · Accepted Answer

Management may prioritize having a secure supply of the product, even if it comes at a higher cost than sourcing it outside the company. This may be due to concerns over quality control, intellectual property, or other factors that could affect the company's overall performance and reputation.

What Would Be a Legitimate Reason for Upper Management to Insist