Division P of the Nyers Company Makes a Part That

question 12

Multiple Choice

Division P of the Nyers Company makes a part that can either be sold to outside customers or transferred internally to Division Q for further processing. Annual data relating to this part are as follows: Division Q of the Nyers Company requires 15,000 units per year and is currently paying an outside supplier $33 per unit. Consider each part below independently.
If outside customers demand 80,000 units, then according to the formula in the text, what is the lowest acceptable transfer price from the viewpoint of the selling division?

• A) $35 per unit
• B) $33 per unit
• C) $28 per unit
• D) $23 per unit

---

Definitions:

External Environment

All external factors and conditions, including physical, social, and economic, that affect an individual or organization.

Speech

The expression of thoughts and feelings by articulated sounds or words, a primary means of human communication.

Perception

The process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment.

Garden Path Sentences

Sentences that begin in such a way that a reader's most likely interpretation will be incorrect and will need to be revised upon reaching the end of the sentence.