Division a Has Variable Manufacturing Costs of $25 Per Unit

question 77

Multiple Choice

Division A has variable manufacturing costs of $25 per unit and fixed costs of $5 per unit.Division A is operating at capacity,what is the opportunity cost of an internal transfer when the market price is $35?

• A) $5.
• B) $10.
• C) $25.
• D) $30.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, usually distributed from the company's profits.

Liquidation

Occurs when a business is terminated, the assets are sold, and liabilities and partners are paid off.

Creditors

Entities or individuals to whom a company owes money or has financial liabilities, often in the context of short or long-term borrowing.

Contract Rate

Rate of interest (based on face value) stated on bond certificate and bond indenture.