Division a of Tripper Company Produces a Part That It

question 41

Multiple Choice

Division A of Tripper Company produces a part that it sells to other companies. Sales and cost data for the part follow: Division B, another division of Tripper Company, would like to buy this part from Division A. Division B is presently purchasing the part from an outside source at $38 per unit. If Division A sells to Division B, $1 in variable costs can be avoided.
Assume that Division A is presently operating at capacity. According to the formula in the text, what is the lowest acceptable transfer price from the viewpoint of the selling division?

• A) $37 per unit
• B) $39 per unit
• C) $36 per unit
• D) $38 per unit

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Definitions:

Toleration Act

Was legislation passed in England in 1689 that granted freedom of worship to Nonconformists, although with several restrictions, marking a step toward religious freedom.

Bill Of Rights

The first ten amendments to the United States Constitution, ratified in 1791, guaranteeing such rights as the freedoms of speech, assembly, and worship.

Glorious Revolution

The overthrow of King James II of England in 1688 by a union of English Parliamentarians with the Dutch stadtholder William III of Orange-Nassau, leading to a constitutional monarchy in Britain.

Chesapeake Labor Force

Historically refers to the workforce in the Chesapeake Bay area, notably including both free and enslaved laborers, primarily in agricultural settings.