Use the following information for the next 2 questions.
The Kelso Division produces and sells a product to external and internal customers. Per-unit information about its operations include:
-If Kelso has sufficient excess capacity to meet internal demand, what should be the transfer price for Kelso's product?
A) $245
B) $250
C) $115
D) $185

Question

Use the following information for the next 2 questions.
The Kelso Division produces and sells a product to external and internal customers. Per-unit information about its operations include: 
-If Kelso has sufficient excess capacity to meet internal demand, what should be the transfer price for Kelso's product?
A) $245 
B) $250 
C) $115 
D) $185

Quizplus · Accepted Answer

When there is sufficient excess capacity, the transfer price should be based on the variable cost, which is typically lower than the market price.

Use the Following Information for the Next 2 Questions