If the Product Sold Between Divisions Has No Intermediate Market

question 8

True/False

If the product sold between divisions has no intermediate market, the opportunity cost of supplying the product internally is the variable cost of the product.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenues.

Responsibility Center

A unit within an organization, such as a department or division, accountable for controlling costs, generating revenues, or managing assets.

Profit Center

A separate business unit or department within a company that is responsible for generating its own revenue and profit.

Cost Center

A department within a company that does not directly add to profit but still incurs costs, such as the customer service department.