Good, Inc.'s Records Reveal the Following

Good, Inc.'s records reveal the following:
The variable cost of Division B will be incurred whether it buys from Division A or from an outside supplier.
-If Division A wants to transfer the components to Division B for $30 each, the manager of Division B would

A) not want to buy from Division A, as the same component could be purchased at the market price of $24.
B) buy from Division A, as this would be in the best interest of the company as a whole.
C) buy from Division A as long as Division A could supply a large enough quantity to make it profitable to Division B.
D) probably ask Division A's manager to split the difference between the $30 and the market price of $24 to arrive at a transfer price of $27.

Correct Answer:

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