When the Selling Division in an Internal Transfer Has Unsatisfied

question 2

Multiple Choice

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

• 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 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.

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Definitions:

Subsidy

A financial contribution provided by the government or another body to support an industry, business, or individual.

Earned Income Tax Credit

A refundable tax credit for low- to moderate-income working individuals and families, aimed at reducing poverty and encouraging work.

Working Poor

Individuals who are employed but still live below the poverty line due to low wages and inadequate employment benefits.

Minimum-wage Laws

Legislation that sets the lowest hourly rate of pay that an employer can legally pay their workers, intended to protect workers from unduly low pay.