In setting internal transfer prices, the minimum price that the selling 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 lost by the transfer.
D)Its variable cost plus an internal profit margin.

Question

Quizplus · Accepted Answer

The minimum transfer price should cover the variable cost of the product and any opportunity costs incurred by the selling division due to the transfer.

In Setting Internal Transfer Prices, the Minimum Price That the Selling