Dynamic Engine Corporation the Motor Division of Dynamic Engine Corporation

question 117

Multiple Choice

Dynamic Engine Corporation The Motor Division of Dynamic Engine Corporation uses 5,000 carburetors per month in its production of automotive engines.It presently buys all of the carburetors it needs from two outside suppliers at an average cost of $100.The Carburetor Division of Dynamic Engine Corporation manufactures the exact type of carburetor that the Motor Division requires.The Carburetor Division is presently operating at its capacity of 15,000 units per month and sells all of its output to a foreign car manufacturer at $106 per unit.Its cost structure (on 15,000 units) is:
Assume that the Carburetor Division would not incur any variable selling costs on units that are transferred internally.
Refer to Dynamic Engine Corporation.What is the minimum of the transfer price range for a transfer between the two divisions?

• A)$96
• B)$90
• C)$70
• D)$106

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Definitions:

Hypocarbia

A condition marked by reduced levels of carbon dioxide in the blood, usually due to excessive breathing.

Physical Activity

Any bodily movement produced by skeletal muscles that requires energy expenditure, important for maintaining physical fitness and health.

Muscle-strengthening

Physical exercises designed to improve muscle strength, endurance, and mass.

Aerobic

Relating to, involving, or requiring free oxygen, often referred to activities or exercises that improve the efficiency of the body's cardiovascular system in absorbing and transporting oxygen.