Using the Formula in the Text, If the Lowest Acceptable

question 170

Multiple Choice

Using the formula in the text, if the lowest acceptable transfer price from the viewpoint of the selling division is $75 and the opportunity cost per unit on outside sales is $24, then the variable cost per unit must be:

• A) $24 per unit
• B) $99 per unit
• C) $51 per unit
• D) $75 per unit

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Definitions:

Budgeted Accounts Receivable

Forecasted or estimated amounts that a business expects to receive from customers for credit sales.

Credit Sales

Sales made by a business where payment is delayed as per agreed terms, allowing the customer to pay at a later date.

Cash Budget

A forecast of cash inflows and outflows for a business or individual for a specific period of time.

Budgeted Income Statement

A financial statement that forecasts a company's revenue, expenses, and net income for a future period.