A selling division at capacity is indifferent between selling to outsiders and transferring inside at the market price.

Question

Quizplus · Accepted Answer

When a selling division is at capacity, there is no additional cost involved in selling to outsiders or transferring inside, as the division is already operating at its full potential. As a result, the profit would be the same in either case, making the division indifferent between the two options.

A Selling Division at Capacity Is Indifferent Between Selling to Outsiders