Hamilton Has No Excess Capacity

question 86

Multiple Choice

Hamilton has no excess capacity. If the company wishes to implement the general transfer-pricing rule, the opportunity cost would be equal to:

• A) zero.
• B) the direct expenses incurred in producing the goods.
• C) the total difference in the cost of production between two divisions.
• D) the contribution foregone from the lost external sale.

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Definitions:

Compensation

Compensation refers to the total amount of the financial and non-financial rewards provided to employees for their service to the organization, including wages, benefits, and bonuses.

Employer Rights

Legal entitlements and powers that allow business owners and managers to conduct business, manage their employees, and make decisions regarding workplace operations.

Union Contract

A written agreement between a labor union and an employer that outlines the terms of employment, including wages, hours, working conditions, and grievance procedures.

Legally Binding

A contract or agreement that is enforceable by law, where parties are obligated to fulfill their contractual duties.