Using the Formula in the Text, If the Lowest Acceptable

question 24

Multiple Choice

Using the formula in the text, if the lowest acceptable transfer price from the viewpoint of the selling division is $90 and the opportunity cost per unit on outside sales is $40, then the variable cost per unit must be:

• A)$90
• B)$40
• C)$130
• D)$50

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Definitions:

Acceptance

In contract law, it is the act of agreeing to the terms of an offer, thus creating a binding contract.

Commercial Reasonableness

A legal standard that measures the fairness of business practices, actions, or decisions in a commercial context.

Subjective Standard

A benchmark for judgment based on personal opinions, feelings, or tastes, rather than external facts.

Good Faith

An intention to act with honesty, fairness, and integrity in dealings, without seeking to deceive or defraud.