Given the Following Data for Electrical Cord Division Assume That the Electrical Cord Division Is Selling All It

question 89

Multiple Choice

Given the following data for Electrical Cord Division:
$$\begin{array} { l r } \text { Selling price to outside customers } & \$40 \\\text { Variable cost per unit } & 30 \\\text { Total fixed cost } & 10,000 \\\text { Capacity (in units) } & 2,000\end{array}$$
Assume that the Electrical Cord Division is selling all it can produce to outside customers. If it sells to the Appliance Division, $1 can be avoided in variable cost per unit. The Appliance Division is presently purchasing from an outside supplier at $38 per unit. From the point of view of the company as a whole, any sales to the Appliance Division should be priced at:

• A) $40.
• B) $39.
• C) $38.
• D) The company would not want the transfer to take place.

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Definitions:

Subjective

Relating to experiences, perspectives, or perceptions that are influenced by personal feelings, tastes, or opinions.

Objective

Pertains to observations or measures that are not influenced by the observer's feelings, interpretations, or prejudice, and thus considered unbiased.

Inaccurate

Not correct, precise, or true; containing errors or mistakes.

Decay Theory

The hypothesis that memory fades and disappears over time if not used or revisited.