Figure 12-3

question 81

Multiple Choice

Figure 12-3. Grey Inc.has many divisions that are evaluated on the basis of ROI.One division,Centra,makes boxes.A second division,Mantra,makes chocolates and needs 80,000 boxes per year.Centra incurs the following costs for one box:
Centra has capacity to make 700,000 boxes per year.Mantra currently buys its boxes from an outside supplier for $1.80 each (the same price that Centra receives) .
Refer to Figure 12-3.Assume that Grey Inc.allows division managers to negotiate transfer price.Alpha is producing 700,000 boxes.If Centra and Mantra agree to transfer boxes,what is the floor of the bargaining range and which division sets it?

• A)$1.80; Centra
• B)$1.35; Centra
• C)$1.48; Mantra
• D)$1.35; Mantra
• E)$1.80; Mantra

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Definitions:

Particular Situation

A specific set of circumstances or context in which an event or study is conducted.

Compulsion

A psychological condition where an individual feels the need to perform specific actions repeatedly in an attempt to reduce anxiety or prevent a perceived negative outcome.

Agoraphobia

An anxiety disorder characterized by an intense fear of being in situations where escape might be difficult or help wouldn't be available if things go wrong.

Social Phobia

A persistent and overwhelming fear of social situations, leading to significant anxiety and avoidance that impair daily functioning.