Answer:
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Explanation:
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Net income is also called net profit. Its formula is: Net income= Total Revenue-Total expensesTotal revenue: 1,000,000Total expenses and taxes: 500,000Net income= 1,000,000-500,000Net income= $500,000
Answer:
Minimum transfer price= $30
Explanation:
The transferring division, Division X currently has excess capacity which is equal to
<em>The total capacity - external sales = 40,000 - 35,000 = 5,000 units</em>
This implies that it can meet the sales request of division Y from the excess capacity without any opportunity cost.
In this situation, where the there is no opportunity cost associated with transfer, the minimum transfer price would be :
Minimum transfer price ≥ unit variable cost
Note that unit variable cost is $30.
<em>The unit variable cost of $30 represents the relevant cost per unit of producing a unit</em>
Minimum transfer price= $30
A price between $30 and $48 would be acceptable to both divisions
Answer:
1. Puts downward pressure on prices
2. maximizes total utility
Explanation: