Wetherald Products, Inc

question 19

Multiple Choice

Wetherald Products, Inc., has a Pump Division that manufactures and sells a number of products, including a standard pump that could be used by another division in the company, the Pool Products Division, in one of its products. Data concerning that pump appear below: The Pool Products Division is currently purchasing 4,000 of these pumps per year from an overseas supplier at a cost of $74 per pump.
Assume that the Pump Division is selling all of the pumps it can produce to outside customers. What should be the minimum acceptable transfer price for the pumps from the standpoint of the Pump Division?

• A) $64 per unit
• B) $74 per unit
• C) $82 per unit
• D) $53 per unit

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Definitions:

Minimize

The process of reducing or bringing something down to the smallest possible amount or degree.

Distances

The amount of space between two points, which can be measured in various units such as kilometers, miles, meters, or feet, important for logistics and planning.

Minimum Cost

The lowest possible expense incurred in the production or acquisition of goods or services without compromising quality.

Shipping Solution

A system or service that simplifies the process of sending goods from one place to another.