the ideal situation, if a spare capacity exists is to transfer units at a marginal cost per unit. is the marginal cost per unit equal to VARIABLE COST PER UNIT or CONTRIBUTION PER UNIT?? pls help. i have seen many solutions using both. but i want to know which one is right..
Hi hunnain, If spare capacity exist and there is not an external market best for the company is to transfer at VARIABLE COST. If you could tell me what that Q you have seen says I might be able to help. Amarain