Examveda
Examveda

Per unit opportunity cost to selling subunit of company, is added into per unit incremental cost is incurred at point of transfer to calculate

A. minimum operating cost

B. maximum operating costs

C. maximum transfer price

D. minimum transfer price

Answer: Option D

Solution(By Examveda Team)

Per unit opportunity cost to selling subunit of company, is added into per unit incremental cost is incurred at point of transfer to calculate minimum transfer price. The minimum transfer price equals the incremental cost to create one product. The incremental price includes direct labor, direct material and direct overhead costs but excludes the expenses the transferring center would have incurred whether or not it made the product.

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