Spring Corp

question 109

Multiple Choice

Spring Corp.has two divisions,Daffodil and Tulip.Daffodil produces a gadget that Tulip could use in its production.Tulip currently purchases 100,000 gadgets for $12.50 on the open market.Daffodil's variable costs are $6 per widget while the full cost is $9.35.Daffodil sells gadgets for $13 each.If Daffodil is operating at capacity,what would be the minimum transfer price Daffodil would accept for an internal transfer?

• A)$6.00
• B)$9.35
• C)$12.50
• D)$13.00

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Definitions:

Alienate People

To cause individuals to feel isolated or estranged, often as a result of actions or policies that are perceived as unfriendly or unrelatable.

Modified Rebuy

A purchasing situation where a buyer reorders a product with minor modifications or adjustments.

Specifications

Detailed descriptions of the design, materials, and performance criteria for products or projects.

Quality

The measure of excellence or state of being free from defects, deficiencies, and significant variations, brought about by strict adherence to measurable and verifiable standards to meet customer expectations.