Hamilton Has Excess Capacity

question 95

Multiple Choice

Hamilton has 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 sum of the variable cost plus the fixed cost.

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Definitions:

Felony

A serious criminal offense, typically punishable by imprisonment for more than one year or by death.

Capital Offense

A crime punishable by death or life imprisonment, typically reserved for the most serious offences like murder or treason.

Maximum Penalty

The most severe punishment that can be imposed for a particular offence by a court of law.

Life Imprisonment

A sentence of imprisonment for a crime where the convicted person is to remain in prison for the rest of their life.