In setting internal transfer prices, the maximum price that the purchasing division would accept is
A)a price that will result in a profit to the selling division.
B)a price that will result in a profit to the purchasing division.
C)its variable cost of the product plus opportunity costs gained by the transfer.
D)its external cost to purchase the product.

Question

Quizplus · Accepted Answer

The maximum price that the purchasing division would accept is its external cost to purchase the product, as paying more than the external market price would not be economically rational for the purchasing division.

In Setting Internal Transfer Prices, the Maximum Price That the Purchasing