When a Division Is Operating at Capacity,the Transfer Price Should

question 109

Multiple Choice

When a division is operating at capacity,the transfer price should be ________.

• A) based on opportunity cost
• B) a market-based transfer price
• C) a cost-based transfer price
• D) the total manufacturing cost

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Definitions:

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, that sells goods or services in exchange for money.

Price

The sum of money anticipated, needed, or provided as compensation for something.

Price of Rice

The cost at which rice is sold, influenced by factors such as supply, demand, quality, and market conditions.

Demand Shift

A change in consumer desire that moves the demand curve to the right (increase) or left (decrease) in a market.