In the Bombadier Company, Division a Has a Product That $A$

question 35

Multiple Choice

In the Bombadier Company, Division A has a product that can be sold either to outside customers or to Division B. Information about these divisions is given below: Division $A$ :
Case $1 \quad$ Case 2
Capacity in units
Number of units sold externally
Market selling price
$\begin{array} { r r } 100,000 & 100,000 \\ 100,000 & 60,000 \\ \$ 90 & \$ 75 \\ 73 & 58 \\ 10 & 10 \end{array}$
Fixed costs per unit based on capacity
Division $\mathrm { B }$ :
Number of units needed for production
Purchase price per unit from external supplier
40,000 $\$ 86$
40,000
$\$ 74$ The company uses the opportunity cost approach to transfer pricing. What is the minimum transfer price in Case 2?

• A)$58
• B)$74
• C)$68
• D)$75

---

Definitions:

Positive

Characteristics, feelings, or behaviors that are conducive to good health, happiness, and well-being.

Negative

Characterized by the absence of positives, or containing adverse, harmful, or undesirable characteristics or outcomes.

Individualistic Culture

A culture that emphasizes personal freedom and achievement, where individuals are encouraged to pursue their own goals and self-expression.

Collectivistic Culture

Cultures that prioritize the goals, needs, and views of the group over those of the individual.