Swan Company Has Two Divisions,Hill and Paradise

question 14

Multiple Choice

Swan Company has two divisions,Hill and Paradise.Hill produces a unit that Paradise could use in its production.Paradise currently is purchasing 5,000 units from an outside supplier for $56.Hill is operating at less than full capacity and has variable costs of $30.80 per unit.The full cost to manufacture the unit is $43.40.Hill currently sells 450,000 units at a selling price of $61.60.How much profit will Hill receive from the transfer if a transfer price of $42 is agreed upon?

• A)$7,000 loss
• B)$98,000 loss
• C)$35,000 profit
• D)$56,000 profit

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Definitions:

Reliability

The degree to which an instrument, tool, or process consistently produces the same results under the same conditions.

Promotional Mix

The combination of marketing communication tools a company uses to fulfill its promotional objectives, including advertising, sales promotion, public relations, personal selling, and direct marketing.

Key Elements

Essential aspects or components that are critical for the success or functionality of a system, process, or strategy.

List

A collection of items or elements that are typically written or printed sequentially.