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

According to the formula in the text,
Minimum transfer price = variable cost per unit + opportunity cost per unit
$90 (minimum transfer price) = variable cost per unit + $40 (opportunity cost per unit)
Solving for the variable cost per unit:
Variable cost per unit = $50

Using the Formula in the Text, If the Lowest Acceptable