Using the Formula in the Text, If the Lowest Acceptable

question 22

Multiple Choice

Using the formula in the text, if the lowest acceptable transfer price from the viewpoint of the selling division is $73 and the opportunity cost per unit on outside sales is $29, then the variable cost per unit must be:

• A) $73 per unit
• B) $29 per unit
• C) $44 per unit
• D) $102 per unit

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Definitions:

Constraints

Limitations or restrictions that affect decision-making or the ability to pursue certain actions.

Economic Beings

Individuals or entities that make decisions based on the maximization of utility or profit, considering factors like scarcity, resources, and preferences.

Market Failure

A situation where the allocation of goods and services by a free market is not efficient, often justifying government intervention.

Self-Interest

The consideration of one's own advantage or well-being above the welfare of others or the community.