S Inc. has two divisions Alpha division and Beta division. Alpha is selling a unit at $60. Its full manufacturing cost is $40 per unit. The final product of Alpha division is one of the products used by Beta division. Beta division can buy the product from outside market at $55 per unit. However, since Alpha division has available spare capacity to fulfil the requirements of Beta division, the divisions have decided to opt for inter-divisional transfer. The managers of both divisions are negotiating over the transfer price. What maximum transfer price will the manager of Beta division accept? a. $55. b. $60. c. $70. d. $100.

S Inc. has two divisions Alpha division and Beta division. Alpha is selling a unit at $60. Its full manufacturing cost is $40 per unit. The final product of Alpha division is one of the products used by Beta division. Beta division can buy the product from outside market at $55 per unit. However, since Alpha division has available spare capacity to fulfil the requirements of Beta division, the divisions have decided to opt for inter-divisional transfer. The managers of both divisions are negotiating over the transfer price. What maximum transfer price will the manager of Beta division accept? a. $55. b. $60. c. $70. d. $100.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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