Question

If the transfer has no effect on fixed cost, the transfer price from the selling division's standard must be equal to or greater than the (variable cost per unit + _______) ÷ number of units transferred.

Answer 1

Opportunity Cost

Step-by-step explanation:

The minimum transfer price is a price that is acceptable to the transferring or selling division and out of a range of acceptable prices, it is the one that will be the best for the company.

Minimum transfer price = Variable Costs per unit + Opportunity Cost per unit - Internal Savings per unit.