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:

Boomerang Effect

A phenomenon where an attempt to persuade or change a belief has the opposite effect, reinforcing the original belief or behavior.

Negative Attitude Change

A shift in a person's feelings and dispositions from positive or neutral to negative towards an object, person, or situation.

Halo Effect

A cognitive bias where the perception of one positive characteristic influences the assumption of other positive traits in the same individual.

Sleeper Effect

A phenomenon where a message that initially has little impact becomes more persuasive over time, typically because of a delay in the message's perceived importance or credibility.