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:

Clavicle

A long bone that serves as a strut between the shoulder blade and the sternum or breastbone, also known as the collarbone.

Coronoid Process

A protrusion on the upper end of the ulna, a bone in the forearm, which serves as an attachment point for muscles.

Mental Foramen

An opening in the jaw bone through which blood vessels and nerves pass, usually located near the lower premolars.

Ramus

The term ramus typically refers to a branch or a part of a bone that extends out from the main body of the bone, often creating a connection with other structures.