When the Selling Division in an Internal Transfer Has Unsatisfied

question 113

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.
• D)the amount that the purchasing division would have to pay an outside seller to acquire a similar product for its use.
• E)all the costs of producing a unit of product.

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Definitions:

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A piece of office equipment used to send a facsimile, or fax, over telephone lines from one modem to another; more commonly called a fax machine.

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Electrical signals that are transmitted for communication between various components of an electronic or biological system.

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A mechanical or electronic device used for calculating sums, primarily used for accounting or bookkeeping purposes.

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A machine used to make copies of documents and images.