Chipper Division of Acme Corp

question 12

Multiple Choice

Chipper Division of Acme Corp.sells 80,000 units of part Z-25 to the outside market.Part Z-25 sells for $40,has a variable cost of $22,and a fixed cost per unit of $10.Chipper has a capacity to produce 100,000 units per period.Jones Division currently purchases 10,000 units of part Z-25 from Chipper for $40.Jones has been approached by an outside supplier willing to supply the parts for $36.If Acme uses a negotiated transfer pricing system,what is the minimum transfer price that should be charged for this transaction?

• A)$40.
• B)$36.
• C)$32.
• D)$22.

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Definitions:

Cotton Gin

An invention by Eli Whitney in 1793 that revolutionized the cotton industry by efficiently separating cotton fibers from their seeds.

Market Revolution

Describes the rapid expansion of the market economy in the 19th century United States, characterized by increases in industrial production and improvements in transportation.

Slavery Expanded

Refers to the growth and spread of the institution of slavery, particularly in the Americas, during the 17th, 18th, and 19th centuries as a result of the transatlantic slave trade.

Population

The total number of people inhabiting a particular country, area, or place, often analyzed for demographic purposes.