The Selling Division’s unit sales price is $25 and its unit variable cost is $15. Its...
The Selling Division’s unit sales price is $25 and its unit variable cost is $15. Its capacity is 10,000 units. Fixed costs per unit are $6.
Current outside sales are 10,000 units.
What is the Selling Division’s opportunity cost per unit from selling 3,000 units to the Purchasing Division?
Question 2 options:
|
$10 |
|
|
$25 |
|
|
$4 |
|
|
$0 |
The price used to record a sale between divisions within the same vertically integrated company is called the
Question 4 options:
|
sales price. |
|
|
integrated price. |
|
|
transfer price. |
|
|
bargain price. |
Homework Answers
Ans 2) $10
Opportunity cost is the income lost due to taking another project. Since Fixed costs are sunk cost, they are irrelevant for decision making. So, contribution margin is relevant which is sales price - variable cost = $ 25 - $ 15 = $ 10
Ans 4) transfer price.
The price used to record a sale between divisions within the same vertically integrated company is called the transfer price.
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