The Table and Chair Divisions Are Part of the Same

question 109

Multiple Choice

The Table and Chair Divisions are part of the same company.Currently the Chair Division buys a part from Table for $384.The Table Division wants to increase the price of the part it sells to Chair by $96 to $480.The manager of Chair has stated that it cannot afford to go that high, as it will decrease the division's profit to near zero.Chair can buy the part from an outside supplier for $448.The cost data for the Table Division is as follows: $$\begin{array} { l r } \text { Direct materials } & \$ 136.00 \\\text { Direct labor } & 200.00 \\\text { Variable overhead } & 40.00 \\\text { Fixed overhead } & 38.40\end{array}$$ If Table ceases to produce the parts for Chair, it will be able to avoid one?third of the fixed manufacturing overhead.The Table Division has excess capacity but no alternative uses for its facilities._____ is the maximum transfer price that should be charged.

• A)$480.00
• B)$448.00
• C)$388.80
• D)$414.40

Understand the implications of breakeven analysis in the context of financial leverage and operating risk.

Understand the importance and application of ethnographic interviewing techniques.

Recognize appropriate body language and seating arrangements in interviewing to foster communication.

Understand the ethical use of confrontation and respect in client interactions.

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Definitions:

Short to Ground

An electrical fault where a positive wire unintentionally connects to the vehicle's frame or ground, potentially causing a circuit to malfunction.

High Resistance

A condition or property of an electrical component or circuit that opposes the flow of current, resulting in less current flow.

Voltage Drop

The reduction in voltage as electric current flows through a conductor, due to the impedance or resistance of the material.

Series Circuit

An electrical circuit in which components are connected end-to-end, so the current flows through each component sequentially.