You Have Been Provided with the Following Information for the Wool

question 69

Multiple Choice

You have been provided with the following information for the Wool Division of a decentralized company:
$$\begin{array} { l l} \text { Selling price } & \$ 45 \\\text { Variable cost per unit } & \$ 33 \\\text { Fixed cost per unit } & \$ 12 \\\text { Sales volume (units) } & 22,500 \\\text { Capacity (units) } & 25,000\end{array}$$
The Blanket Division would like to purchase all of its units internally. The Blanket Division needs 6,000 units each period and currently pays $42 per unit to an outside firm. Assuming that the Blanket Division wants to use a sole supplier and will not purchase less than 6,000 from a supplier, what is the lowest price that Wool Division should accept from the Blanket Division?

• A) $45.
• B) $42.
• C) $40.
• D) $38.

---

Definitions:

Smaller Firms

Refers to businesses that are relatively small in size, often characterized by fewer employees, lower annual revenues, and limited market share compared to larger corporations.

Research and Development (R&D)

is a business or government activity that focuses on the pursuit of innovation through scientific research and product development.

Multinationals

Companies that operate in multiple countries, adapting their strategies to different legal and cultural environments.

Net New Jobs

The total number of jobs created by a business or sector minus the number of jobs lost, indicating overall employment growth.