If a Supplying Division Has Excess Capacity, the Best Transfer

question 61

True/False

If a supplying division has excess capacity, the best transfer price is the product's variable cost.

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Definitions:

Business Unit

A segment within a larger organization that operates independently with its own strategy and financial objectives.

Profit Components

Specific elements that contribute to a company's profit, including revenue, cost of goods sold, operating expenses, and other income or costs.

Manager Responsibility

The obligation of managers to plan, control, and make decisions that align with the strategic objectives and financial performance of the organization.

Transfer Pricing

Pricing transactions internally within a company, especially across borders, for goods, services, or use of property between related entities.