Division a Has Variable Manufacturing Costs of $50 Per Unit

question 118

Multiple Choice

Division A has variable manufacturing costs of $50 per unit and fixed costs of $10 per unit. Assuming that Division A is operating significantly below capacity, what is the optimal transfer price of an internal transfer when the market price is $75?

• A) $20.
• B) $25.
• C) $50.
• D) $60.

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Definitions:

Resources Together

The act of pooling various types of resources such as financial, human, and material to achieve a common goal or project.

Impoverished Management

A management style associated with low concern for both people and production in Blake and Mouton's Managerial Grid.

Concern For People

Emphasizes the importance of considering and prioritizing the well-being and interests of individuals within an organization.

Positive Face

A concept in politeness theory referring to an individual's desire to be appreciated and approved by others in social interactions.