The Alpha Division of a Company, Which Is Operating at Capacity

question 131

Multiple Choice

The Alpha Division of a company, which is operating at capacity, produces and sells 1,000 units of a certain electronic component in a perfectly competitive market. Revenue and cost data are as follows: (CIA adapted)
$$\begin{array} { l r } \text { Sales } & \$ 50,000 \\\text { Variable costs } & 34,000 \\\text { Fixed costs } & 12,000\end{array}$$
The minimum transfer price that should be charged to the Beta Division of the same company for each component is:

• A) $12.
• B) $34.
• C) $46.
• D) $50.

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Definitions:

Contracts

Legally binding agreements between two or more parties that are enforceable by law, typically involving the exchange of goods, services, money, or promises.

Capitalist Rhetoric

Discourse that advocates for or supports the capitalist economic system, emphasizing the importance of free markets, private ownership, and profit.

Popular Culture

Popular culture refers to the set of ideas, perspectives, attitudes, images, and other phenomena that are within the mainstream of a culture, especially Western culture during the late 20th and early 21st centuries.

Military Might

The ability or capacity of a nation's armed forces to use force, especially as a means of defense or warfare.