In negotiating a Transfer Price, the negotiated price must lie between the Market price and the supplying division's total variable costs per unit.

True

False

Product A is produced for $11 per gallon. Product A can be sold without additional processing for $18 per gallon, or processed further into Product B for an additional cost of $7 per gallon. Product B can be sold for $25 per gallon. Using differential analysis, decide whether or not the company should process Product A further to Product B or sell Product A, AND what is the additional value, per unit, of the alternatives.

		$7 per unit, sell Product A
		$0, the company is indifferent
		$4, process to Product B
		$7 per unit, process to Product B

In negotiating a Transfer Price, the negotiated price must lie between the Market price and the supplying division's total variable costs per unit.

True

False

Many corporations allocate support department costs to profit centers. Examples of support departments include all of the following except

		Custodial
		a movie production division
		HR
		Legal