Division a Has Variable Manufacturing Costs of $50 Per Unit

question 2

Multiple Choice

Division A has variable manufacturing costs of $50 per unit and fixed costs of $10 per unit.Division A is operating at capacity,what is the optimal transfer price of an internal transfer when the market price is $75?

• A)$20
• B)$25
• C)$50
• D)$60
• E)$75

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Definitions:

Cost Leadership

A strategic approach where a business aims to become the lowest-cost producer in its industry to gain a competitive advantage.

Personal Mastery

The continuous process of learning and growth on a personal level, aiming for self-improvement and a deeper understanding of oneself.

Exploitative Innovation

Exploitative Innovation involves leveraging existing knowledge and resources to improve or refine products, services, or processes.

Learning Organization

An organization that is skilled at creating, acquiring, and transferring knowledge and at modifying behavior to reflect new knowledge and insights.