A division can sell externally for $60 per unit. its variable manufacturing costs are $35 per unit, and its variable marketing costs are $12 per unit. what is the opportunity cost of transferring internally, assuming the division is operating at capacity? $13. $25. $47. $35.

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Business

Alexis Ware

3 October, 02:27

A division can sell externally for $60 per unit. its variable manufacturing costs are $35 per unit, and its variable marketing costs are $12 per unit. what is the opportunity cost of transferring internally, assuming the division is operating at capacity? $13. $25. $47. $35.

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Sophia · Answer 1

Let us calculate the total variable cost; It is 35+12=47$. The opportunity cost refers to the profit that is lost if we stop one activity in favor of another. In this case, the posiible profit is 60-47=13$. Thus, if it is transferred, we have that the profit lost is 13$ and this is the opportunity cost.