Assume the Thread Division Has Excess Capacity

Multiple Choice

Assume the Thread Division has excess capacity. The Garment Division wants the Thread Division to furnish them additional spools of thread that could be made using the excess capacity. In a negotiated transfer price, the Thread Division should accept as a minimum any transfer price that exceeds the

A) total cost of producing spools for outside sales.
B) variable costs of producing the additional spools for the Garment Division.
C) contribution margin and outside spool sales.
D) foregone contribution margin on outside spool sales.