When the Selling Division in an Internal Transfer Has Unsatisfied

question 195

Multiple Choice

When the selling division in an internal transfer has unsatisfied demand from outside customers for the product that is being transferred,what is the lowest acceptable transfer price as far as the selling division is concerned?

• A) Variable cost of producing a unit of product.
• B) The full absorption cost of producing a unit of product.
• C) The market price charged to outside customers,less any costs saved by transferring internally.
• D) The amount that the purchasing division would have to pay an outside seller to acquire a similar product for its use.