Figure 12-4

question 17

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 is the total benefit for Style?

• A)$243,000
• B)$292,500
• C)$118,800
• D)$69,000
• E)$81,000

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Definitions:

Cost Analysis

The process of evaluating the costs involved in a project or operation. It helps businesses to make better financial decisions by determining the best approach to minimize expenses while maximizing outcomes.

Effective Plans

Strategies or roadmaps devised to achieve specific goals or objectives within a particular timeframe, often with clearly defined steps.

Planning Guidelines

A set of advised strategies or principles designed to direct decision-making and actions in planning projects or activities.

Implementation

The process of putting a decision, plan, strategy, or law into effect in order to achieve intended results or outcomes.