Division a Has Variable Manufacturing Costs of $50 Per Unit

question 42

Multiple Choice

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

• A) $20.
• B) $25.
• C) $50.
• D) $60.

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Definitions:

Risk-Free Rate

The theoretical rate of return on an investment with no risk of financial loss, often represented by the yield on government securities.

Future Exchange Rate

Future Exchange Rate is the anticipated value of one currency in terms of another currency at a specified date in the future, often determined through futures contracts.

British Securities

Stocks, bonds, or other financial instruments issued by companies or the government in the United Kingdom.

Total Return

The overall earnings on an investment, including both capital gains and income, over a specific time period.