Spice Company Has Two Divisions,Parsley and Sage

question 22

Multiple Choice

Spice Company has two divisions,Parsley and Sage.Parsley produces a unit that Sage could use in its production.Sage currently is purchasing 50,000 units from an outside supplier for $50.Parsley is operating at less than its full capacity of 550,000 and has variable costs of $27 per unit.The full cost to manufacture the unit is $38.Parsley currently sells 450,000 units at a selling price of $54.If an internal transfer is made,variable shipping and administrative costs of $2 per unit could be avoided.What would be the impact on Spice Company's overall profits if the internal transfer were made?

• A)no change in overall profits
• B)$1,250,000 increase in profits
• C)$200,000 decrease in profits
• D)$700,000 increase in profits

Understand consumer behavior in anticipating events and their effect on demand curves.

Analyze the factors influencing changes in social behaviors, such as littering, through interventions beyond financial incentives.

Comprehend the rationale behind actions involving fairness in various contexts, including charitable giving and tipping.

Grasp the importance of historical data in estimating returns on equity investments.

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Definitions:

Future Loss

Anticipated reduction or deprivation in value, resources, capabilities, or opportunities that is expected to occur in the future.

Current Loss

The experience of grief or sorrow due to the recent loss of someone or something valuable, impacting an individual’s emotional or mental health.

Seasonal Pattern

A variation in behaviors, activities, or events that correspond with the seasons.

Hopeless

A feeling or state of despair in which one believes that a situation will not improve or that a desired outcome is unattainable.