A division can sell externally for $49 per unit. Its variable manufacturing cost

Question

A division can sell externally for $49 per unit. Its variable manufacturing costs are $18 per unit, and its variable marketing costs are $9 per unit. What is the opportunity cost of transferring internally, assuming the division is operating at capacity?

A. $18

B. $31

C. $22

D. $27

A division can sell externally for $49 per unit. Its variable manufacturing costs are $18 per unit, and its variable marketing costs are $9 per unit. What is the opportunity cost of transferring internally, assuming the division is operating at capacity?

A. $18

B. $31

C. $22

D. $27

Explanation / Answer

C. $22

($49 - $18 - $9) = $22

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