Asked by arielis reyes on Jul 05, 2024
Verified
When the selling division in an internal transfer has unsatisfied demand from outside customers for the product that is being transferred,then the lowest acceptable transfer price as far as the selling division is concerned is:
A) variable cost of producing a unit of product.
B) the full absorption cost of producing a unit of product.
C) the market price charged to outside customers.
D) the amount that the purchasing division would have to pay an outside seller to acquire a similar product for its use.
E) all the costs of producing a unit of product.
Transfer Price
The price at which divisions of a company transact with each other, such as the trade of supplies or labor between departments.
Unsatisfied Demand
A situation where the quantity demanded of a product or service exceeds the quantity supplied at a given price.
Selling Division
A specific segment of a company focused on sales activities, including marketing and distributing products to customers.
- Understand the concepts of internal transfer pricing and the factors influencing the determination of transfer prices.
Verified Answer
Learning Objectives
- Understand the concepts of internal transfer pricing and the factors influencing the determination of transfer prices.
Related questions
Part AR3 Costs the Southwestern Division of Luxon Corporation $26 ...
Wetherald Products, Incorporated, Has a Pump Division That Manufactures and ...
Wetherald Products, Incorporated, Has a Pump Division That Manufactures and ...
Steinhoff Products, Incorporated, Has a Sensor Division That Manufactures and ...
Determining the Transfer Price as the Price at Which the ...