Opportunity cost arises where Selling division (Division A) has a choice either to sell goods to Buying division (Division B) or to sell externally to the intermediate market [correct?]
So we can say that opportunity cost exists only when selling division (division A) has external intermediate market to sell goods to. There will no opportunity cost in case where division A has no external market to sell goods to [correct?]
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Transfer Price lost contribution
4y ago#1That is correct assuming, of course, that the selling division has limited production capacity.
Have you watched the free lectures on transfer pricing?
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