Winzel Ltd Has 2 Divisions, Diodes and Boards If Diodes Can Sell All of Its Production Externally, What

question 47

Multiple Choice

Winzel Ltd has 2 divisions, Diodes and Boards. The diode can be sold internally or externally. If sold externally, the sales price is $15 per diode. The Boards division needs 3 diodes for each electronic board it produces. The external sales prices and costs are: $\begin{array}{lrr}&\underline{\text {Diodes}}&\underline{\text {Boards}}\\\text { Sales price per unit } & \$ 15.00 & \$ 16.50 \\\text { Variable costs (direct) per unit } & 6.00 & 9.00 \\\text { Fixed costs per unit } & 3.00 & 6.00\end{array}$
If Diodes can sell all of its production externally, what is the minimum price at which it would be willing to sell internally, and what is the maximum price the Board Division would be willing to pay? $\begin{array} { l l } \text { Diodes } & \text { Boards }\\\underline{\text {Willing to Sell }}&\underline{\text {Willing to Pay}} \end{array}$
a. $\$ 15 \quad \quad \quad \quad \quad \quad \quad\$ 2.50$
b. $\$ 15 \quad \quad \quad \quad \quad \quad \quad \$ 7.50$
c. $\$ 15 \quad \quad \quad \quad \quad \quad \quad\$ 15.00$
d. $\$ 27 \quad \quad \quad \quad \quad \quad \quad \$ 27.00$

• A) $15/$7.50
• B) $15/$15
• C) $15/$2.50
• D) $15/$27

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Definitions:

Public Good

A good that is non-excludable and non-rivalrous, meaning it can be consumed by many people without reducing its availability to others.

Utilitarian Justice

An ethical framework that assesses actions based on their consequences, aiming to maximize overall happiness and minimize suffering.

Dollar Worth

The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.

After-Tax Distribution

The process of allocating income or assets to various recipients after all applicable taxes have been deducted.