Reference no: EM132542157

Question 1: In setting internal transfer prices, the minimum price that the selling division would accept is

Option 1: a price that will result in a profit to the selling division.

Option 2: a price that will result in a profit to the purchasing division.

Option 3: its variable cost of the product plus opportunity costs lost by the transfer.

Option 4: its variable cost plus an internal profit margin.

Question 2: In setting internal transfer prices, the maximum price that the purchasing division would accept is

Option 1: a price that will result in a profit to the selling division.

Option 2: a price that will result in a profit to the purchasing division.

Option 3: its variable cost of the product plus opportunity costs gained by the transfer.

Option 4: its external cost to purchase the product.