Using the formula in the text, if the lowest acceptable transfer price from the viewpoint of the selling division is $75 and the opportunity cost per unit on outside sales is $24, then the variable cost per unit must be:

A) $24 per unit
B) $99 per unit
C) $51 per unit
D) $75 per unit

Question

Amrit Grewal · Accepted Answer

Final Answer : C, Explanation :  The formula for calculating the lowest acceptable transfer price from the viewpoint of the selling division is: variable cost + opportunity cost per unit.Let's use the given values:Lowest acceptable transfer price = $75Opportunity cost per unit = $24Substituting in the formula:$75 = variable cost per unit + $24Solving for the variable cost per unit:Variable cost per unit = $75 - $24Variable cost per unit = $51Therefore, the variable cost per unit must be $51 per unit. Option C is the correct answer.

Using the formula in the text, if the lowest acceptable transfer price from the viewpoint of the selling division is $75 and the opportunity cost per unit on outside sales is $24, then the variable cost per unit must be:

A) $24 per unit
B) $99 per unit
C) $51 per unit
D) $75 per unit

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Learning Objectives

Related questions

Using the formula in the text, if the lowest acceptable transfer price from the viewpoint of the selling division is $75 and the opportunity cost per unit on outside sales is $24, then the variable cost per unit must be:A) $24 per unitB) $99 per unitC) $51 per unitD) $75 per unit

Definitions

Learning Objectives

Learning Objectives

Related questions

Using the formula in the text, if the lowest acceptable transfer price from the viewpoint of the selling division is $75 and the opportunity cost per unit on outside sales is $24, then the variable cost per unit must be:

A) $24 per unit
B) $99 per unit
C) $51 per unit
D) $75 per unit