When the Selling Division in an Internal Transfer Has Unsatisfied

Multiple Choice

When the selling division in an internal transfer has unsatisfied demand from outside customers for the product that is being transferred, then the lowest acceptable transfer price as far as the selling division is concerned is:

A) the full absorption cost of producing a unit of product.
B) the amount that the purchasing division would have to pay an outside seller to acquire a similar product for its use.
C) all the costs of producing a unit of product.
D) variable cost of producing a unit of product.
E) the market price charged to outside customers, less costs saved by transferring internally.