In the Bombadier Company, Division a Has a Product That

question 68

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. What is the minimum transfer price in Case 1?

• A)$90
• B)$73
• C)$83
• D)$86

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Definitions:

Hazardous Wastes

Materials that are dangerous to human health or the environment, requiring careful handling and disposal to prevent harm.

Precycling

The practice of reducing waste by attempting to avoid bringing into the home or business items which will generate waste.

Sensory Memory

The shortest-term element of memory, it is the ability to retain impressions of sensory information after the original stimuli have ended.

Long-term Memory

A type of memory responsible for the storage of information over an extended period, ranging from days to decades.