When negotlating a transfer price, which price is most acceptable to the selling divislon if they are operating with Idle capacity? Multiple Choice the price must cover at least the variable manufacturing costs of the selling division the price must be less than the variable manufacturing costs of the selling division the price must cover at least the variable manufacturing costs of the buying division the price must cover at least the selling price to outside customers

When negotlating a transfer price, which price is most acceptable to the selling divislon if they are operating with Idle capacity? Multiple Choice the price must cover at least the variable manufacturing costs of the selling division the price must be less than the variable manufacturing costs of the selling division the price must cover at least the variable manufacturing costs of the buying division the price must cover at least the selling price to outside customers

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 12DQ: If the minimum transfer price of the selling division is less than the maximum transfer price of the...

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A company accepts incremental business at a special price that exceeds the variable cost. What other issues must the company consider in deciding whether to accept the business?
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Market-based transfer prices are best for the buying division. the company when the selling division is operating below capacity. the company when the selling division is operating at capacity. the buying division if it is operating at capacity.
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Calculate the lowest acceptable transfer price for the seller (Division A) ?