Suppose the selling division is operating at less than full capacity.Where would the floor of the bargaining range most probably be set at?
A)the market price
B)the full manufacturing cost
C)the average price of all products sold by the selling division
D)the variable cost of manufacturing

Question

Quizplus · Accepted Answer

The floor of the bargaining range would most probably be set at the variable cost of manufacturing when the selling division is operating at less than full capacity. This is because any price above the variable cost would contribute to covering the fixed costs and potentially generate profit, making it a logical minimum for internal negotiations.

Suppose the Selling Division Is Operating at Less Than Full