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Since opportunity cost is relevant to the transfer pricing and relevant costing.
1) opportunity cost in transfer pricing is calculated as (external selling price – variable cost) and it is where the selling division has limited production capacity.
2) But is this the same way we calculated the opportunity cost in relevant costing (or it depends on the wording of the question?)
3) opportunity cost is when there is a limited production capacity and we cannot satisfy either party involved in a situation both in transfer pricing and relevant costing?
Is that all correct?
2. The idea is the same, but it does depend on the wording of the question.