If the opportunity cost per barrel is $45 per unit, incremental cost per barrel is $65, then minimum transfer price will be __________?
Correct answer: B. $110
- A. $45
- B. $110
- C. $20
- D. $65
Explanation
The minimum transfer price equals incremental cost plus opportunity cost: $65 + $45 = $110 per barrel. The opportunity cost represents the contribution sacrificed by the selling subunit.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
Practise Cost Accounting
941 free Cost Accounting MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Accounting questions like this
Accounting is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Cost Accounting questions
An exertion for achieving a set goal is known as ____________?
The products or services that are transferred between different subunits of a company are classified as _____________?
An organizational practice, according to which the decision making freedom is available to lower level managers is known as _____________?
A situation when groups and individuals work together for achieving a particular goal can be classified as _________?
Some of the methods used for determining transfer prices are ___________?
The per unit opportunity cost to the selling subunit of company, is added into per unit incremental cost is incurred at point of transfer to calculate ____________?