Multiple Choice
CableTech's Suburban Division is currently purchasing a part from an outside supplier. The company's Metro Division, which has no excess capacity, makes and sells this part for external customers at a variable cost of $20 and a selling price of $32. If Metro begins sales to Suburban, it (1) will use the general transfer-pricing rule and (2) will be able to reduce variable cost on internal transfers by $4. On the basis of this information, Metro would establish a transfer price of:
A) $12.
B) $16.
C) $20.
D) $28.
E) $32.
Correct Answer:
Verified
Correct Answer:
Verified
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