In the Bombadier Company, Division A has a product that can be sold either to outside customers or to Division B. Information about these divisions is given below: Case 1 Case 2 Division A: Capacity in units 100,000 100,000 Number of units sold externally 100,000 60,000 Market selling price $90 $75 Variable costs per unit 73 58 Fixed costs per unit based on capacity 10 10 Division B: Number of units needed for production 40,000 40,000 Purchase price per unit from external supplier $86 $74 The company uses the opportunity cost approach to transfer pricing. 

What is the minimum transfer price in Case 1? 

a). $73 

b). $86 

c). $83 

d). $90rn

The company uses the opportunity cost approach to transfer pricing. What is the maximum transfer price in Case 1?

a). $90
b). $73
c). $83
d). $91

The company uses the opportunity cost approach to transfer pricing. What is the minimum transfer price in Case 2?

a). $58
b). $75
c). $74
d). $68

The company uses the opportunity cost approach to transfer pricing. What is the maximum transfer price in Case 2?

a). $74
b). $58
c). $75
d). $68

The company uses the opportunity cost approach to transfer pricing. Which case should not be transferred internally?

a). Both should be transferred internally.
b). Neither should be transferred internally.
c). Case 2
d). Case 1

Answer rating: 100% (QA)

Case 1 Case 2 Division A Unit capacity 100000 100000 Units sol... View the full answer