An internal transfer between two divisions is in the best economic interests of the entire organization when:
A. there is excess capacity in the buying division with no alternative use.
B. the variable costs plus the opportunity cost of the selling division is greater than the external price for the buying division.
C. the variable costs plus the opportunity cost of the selling division is less than the external price for the buying division.
D. there is no established market price for the buying division.
Answer: C
You might also like to view...
Investment center managers are evaluated on their use of investment center assets to generate income.
Answer the following statement true (T) or false (F)
In market-directed economies, unregulated monopolies are rare.
Answer the following statement true (T) or false (F)
In picking the smoothing constant for an exponential smoothing model, we should look for a value that
A) produces a nice-looking curve. B) equals the utility level that matches with our degree of risk aversion. C) produces values which compare well with actual values based on a standard measure of error. D) causes the least computational effort. E) None of the above
Cosmo Inc. purchased an asset costing $67,500 by paying $13,500 cash at date of purchase and giving the seller a 5-year interest-bearing note for the $54,000 balance. Cosmo's tax basis in the asset is $13,500.
Answer the following statement true (T) or false (F)