The minimum transfer price equals ________.
A) opportunity costs less the additional outlay costs
B) opportunity costs times 125% plus the additional outlay costs
C) opportunity costs divided by the additional outlay costs
D) incremental costs plus opportunity costs

Question

Quizplus · Accepted Answer

The minimum transfer price is the minimum amount that the selling division will accept as transfer price, which should at least cover its incremental costs and opportunity costs. Therefore, the correct option is D - incremental costs plus opportunity costs. A is incorrect because it does not consider the additional outlay costs. B is incorrect because there is no standard markup percentage. C is incorrect because it does not consider the incremental costs incurred.

The Minimum Transfer Price Equals ________