The Following Information Is Available for the Two Divisions of MAC

question 119

Essay

The following information is available for the two divisions of MAC Company:
$\begin{array}{llr} \text {Division A: } &\\ \text { Selling price to outside market } &\$55\\ \text {Standard unit\_level costs } &35\\ \text { Division B: } &\\ \text { Selling price of finished product } &\$95\\ \text { Standard unit\_level costs } &25\\\end{array}$

Division A has no excess production capacity.
Required:
a) In order to ensure the best use of the productive capacity of Division A, what transfer price should be set by Division A and what effect does this transfer price have on the overall margin for the company? Is the answer goal congruent under the general rule?
b) Should Division B accept a special order for its product if the selling price is reduced to $70. Use your answer from (a) and explain.
c) Would your answer to (b) change if Division A had excess capacity? Explain.

---

Definitions:

Psychoanalytic Stage

A phase in Freud's theory of psychosexual development, where the focus of pleasure and conflict shifts across different parts of the body throughout childhood.

Behaviorist Theory

A theory that focuses on observable behaviors and the ways in which they're learned rather than on internal processes like thoughts and emotions.

Gender Development

The process by which individuals develop their gender identity, roles, and expressions, influenced by biological, social, and cultural factors.

Gender Role

A set of societal norms dictating the behaviors, interests, and attitudes that are considered appropriate for individuals based on their presumed sex.