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 ____________?
Correct answer: B. minimum transfer price
- A. minimum operating cost
- B. minimum transfer price
- C. maximum transfer price
- D. maximum operating costs
Explanation
The selling subunit’s minimum transfer price is its incremental cost plus the opportunity cost of the resources used. This formula identifies the minimum transfer price, not the maximum price.
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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.
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