Spice Company Has Two Divisions,Parsley and Sage

question 24

Multiple Choice

Spice Company has two divisions,Parsley and Sage.Parsley produces a unit that Sage could use in its production.Sage currently is purchasing 50,000 units from an outside supplier for $50.Parsley is operating at less than full capacity and has variable costs of $27 per unit.The full cost to manufacture the unit is $38.Parsley currently sells 450,000 units at a selling price of $54.If an internal transfer is made,variable shipping and administrative costs of $2 per unit could be avoided.What would be the minimum transfer price?

• A)$25
• B)$27
• C)$36
• D)$52

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Definitions:

Sensory Memory

A type of storage that holds sensory information for a few seconds or less.

Long-term Memory

A kind of memory that holds information for a long duration, from several days to many years.

Memory

The cognitive process of encoding, storing, and retrieving information, playing a vital role in learning and consciousness.

Retain Information

The ability or process of keeping or holding knowledge in the memory for later recall or use.