In the Bombadier Company, Division a Has a Product That

question 87

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: $\begin{array}{lrr}&\text {Case 1 }&\text {Case } 2\\\text { Division A: } & & \\\text { Capacity in units } & 100,000 & 100,000 \\\text { Number of units sold externally } & 100,000 & 60,000 \\\text { Market selling price } & \$ 90 & \$ 75 \\\text { Variable costs per unit } & 73 & 58 \\\text { Fixed costs per unit based on capacity } & 10 & 10\\\\\text { Division } B:\\\text { Number of units needed for production } & 40,000 & 40,000 \\\text { Purchase price per unit from external supplier } & \$ 91 & \$ 74\end{array}$ The company uses the opportunity cost approach to transfer pricing. Which case should not be transferred internally?

• A)Both should be transferred internally.
• B)Neither should be transferred internally.
• C)Case 1
• D)Case 2

---

Definitions:

Grant

A Grant is a financial award given by an organization, usually the government, to individuals, businesses, or other entities to support a specific project or purpose without requiring repayment.

Natural Resource Problem

Issues arising from the overuse, misuse, or depletion of natural resources, often leading to environmental and ecological harm.

Developing Countries

Nations with lower levels of industrialization, lower standards of living, and, generally, lower Human Development Index scores than developed countries.

Economic Development

The process by which a nation improves the economic, political, and social well-being of its people, typically through increasing levels of income, education, and health.