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

---

Definitions:

Placebo Effects

The phenomenon in which a patient's symptoms can be alleviated by an ineffective treatment, due to the patient's belief in the treatment's efficacy.

Fake Treatment

A placebo or sham treatment given to a control group in experiments to assess the effect of the actual treatment on another group.

Intervention

An action or process of intervening, typically aimed at improving a situation or preventing undesirable outcomes.

Learning Principles

Fundamental guidelines or concepts that explain how individuals acquire, modify, and retain knowledge and behaviors.