The Tortilla Chip Business Unit at Chipz Corp Has Reported

Multiple Choice

The Tortilla Chip business unit at Chipz Corp has reported the following results for years 1 and 2 of their operation: The Tortilla Chip business unit sold 69,870 bags in year one, and they sold 75,433 bags in their second year. In the first year, they had operating capacity of 75,000 bags and fulfilled a special order for an internal department of 12,465 bags. In the second year, they had operating capacity of 80,000 bags and fulfilled a special order for an internal department of 14,788 bags. Which of the following is an accurate representation of the difference in minimum acceptable transfer price between the two years? (Round per unit cost to two decimal places.)

A) With idle capacity, the unit transfer price is $0.02 higher in Year 1 than Year 2.
B) With idle capacity, the unit transfer price is $0.02 higher in Year 2 than Year 1.
C) With no idle capacity, the unit transfer price is $0.04 higher in Year 1 than Year 2.
D) With no idle capacity, the unit transfer price is $0.04 higher in Year 2 than Year 1.