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In the Bombadier Company, Division A has a product that can be sold either to outside...

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. $90

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

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