(Appendix 12A)Using the formula in the text, if the lowest acceptable transfer price from the viewpoint of the selling division is $90 and the opportunity cost per unit on outside sales is $40, then the variable cost per unit must be:
A)$90
B)$40
C)$130
D)$50

Question

Quizplus · Accepted Answer

From the perspective of the selling division, profits would increase as a result of the transfer if and only if:
Transfer price > Variable cost per unit + Opportunity cost per unit = $90 per unit
Variable cost per unit + $40 per unit = $90 per unit
Variable cost per unit = $90 per unit - $40 per unit = $50 per unit

(Appendix 12A)Using the Formula in the Text, If the Lowest