Answer:
a. $11
b. $22
c. Range is $11 to $22
Explanation:
Part a
The lowest acceptable (minimum) transfer price is the price that is acceptable to the transferring division and out of a range of prices, it could be that which would be the best for the company.
Minimum Transfer Price = Variable Costs per unit - Internal Savings + Opportunity Cost
where,
Variable Costs per unit = $11
Internal Savings = $0
Opportunity Cost = $0
therefore,
Minimum Transfer Price = $11
Part b
The highest acceptable(maximum) transfer price is the maximum price that causes the receiving or buying division to breakeven. It could also be the price at which they could purchase the product in the market at arms length position.
therefore,
Maximum Transfer Price = $22
Part c
The best range of acceptable transfer prices must encourage goal congruence, must facilitate measurement of performance and divisions should function autonomously.
therefore,
The best range of acceptable transfer prices is within the Minimum and Maximum Transfer Price.
The correct answer is letter C
It would be b
because start up cost would be basic things to get business running.
Yes it is affordable however I don’t know what eduloan is
