Figure 12-4

question 156

Multiple Choice

Figure 12-4. Quinn Inc.has a number of divisions.One division,Style,makes zippers that are used in the manufacture of boots.Another division,LeatherStuff,makes boots that use the zippers and needs 90,000 zippers per year.Style incurs the following costs for one zipper:
Quinn has capacity to make 950,000 zippers per year,but due to a soft market,only plans to produce and sell 620,000 zippers next year.LeatherStuff currently buys zippers from an outside supplier for $3.50 each (the same price that Style receives) .
Refer to Figure 12-4.Assume that Style and LeatherStuff have agreed on a transfer price of $3.25.What are the total cost savings for LeatherStuff?

• A)$22,500
• B)$315,000
• C)$292,500
• D)$69,000
• E)$81,000

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Definitions:

Dream Analysis

A therapeutic technique, often used in psychoanalysis, which interprets the content of dreams to uncover underlying thoughts and feelings.

Identity Crisis

The failure to achieve ego identity during adolescence.

Foreclosure Status

In psychology, particularly Eriksonian theory, foreclosure status refers to an uncritical acceptance of parental or societal values without exploring personal identity.

Moratorium Status

A stage in identity development where an individual is actively exploring options but has not yet made a commitment to any particular identity or path.