A division can sell externally for $60 per unit. Its variable manufacturing costs are $35 per unit, and its variable marketing costs are $12 per unit. What is the optimal transfer price for transferring internally, assuming the division is operating at capacity?
A) $12.
B) $35.
C) $47.
D) $60.

Question

Quizplus · Accepted Answer

The optimal transfer price when operating at capacity is the external market price, which is $60, as it reflects the opportunity cost of selling externally.

A Division Can Sell Externally for $60 Per Unit