Division A has variable manufacturing costs of $54 per unit and fixed costs of $
ID: 2472784 • Letter: D
Question
Division A has variable manufacturing costs of $54 per unit and fixed costs of $10 per unit. Assuming that Division A is operating at capacity, what is the optimal transfer price of an internal transfer when the market price is $81.0?
A. $27
B. $81
C. $54
D. $17
Division A has variable manufacturing costs of $54 per unit and fixed costs of $10 per unit. Assuming that Division A is operating at capacity, what is the optimal transfer price of an internal transfer when the market price is $81.0?
A. $27
B. $81
C. $54
D. $17
Explanation / Answer
Assuming from the point of view of division A, the minimum transfer price is $ 54 that is variable manufacturing overhead.
Answer: C $ 54