A Division Can Sell Externally for $40 Per Unit

question 144

Multiple Choice

A division can sell externally for $40 per unit. Its variable manufacturing costs are $15 per unit, and its variable marketing costs are $6 per unit. What is the opportunity cost of transferring internally, assuming the division is operating at capacity?

• A) $15.
• B) $19.
• C) $21.
• D) $25.

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Definitions:

Wheal

A raised, itchy area of skin that usually signifies an allergic reaction.

Injection Site

The specific area of the body where a needle is inserted to deliver medication or vaccines.

Decline Stage

Becoming less intense, subsiding; a period of time when the symptoms of disease start to disappear.

Whooping Cough

A highly contagious respiratory disease caused by the bacterium Bordetella pertussis, characterized by severe coughing spells followed by a whooping sound.