An Internal Transfer Between Two Divisions Is in the Best

question 13

Multiple Choice

An internal transfer between two divisions is in the best economic interests of the entire organization when:

• A) the variable costs plus the opportunity cost of the selling division is greater than the external price for the buying division.
• B) the variable costs plus the opportunity cost of the selling division is less than the external price for the buying division.
• C) there is excess capacity in the buying division with no alternative use.
• D) there is no established market price for the buying division.