Figure 20-1
Universe Industries Has Two Divisions: the Haley Division

question 32

Multiple Choice

Figure 20-1
Universe Industries has two divisions: the Haley Division and the Comet Division. Information about a component that the Haley Division produces is as follows: $\begin{array}{lr}\text { Sales } & £ 120 \text { per unit } \\\text { Variable manufacturing costs } & £ 30 \text { per unit } \\\text { Fixed manufacturing overhead } & £ 20 \text { per unit } \\\text { Expected sales in units } & 4,000 \text { units }\end{array}$ The Haley Division can produce up to 5,000 components per year. The Comet Division needs 200 units of the component for a product it manufactures.
-Refer to Figure 20-1. If the selling division did NOT have excess capacity, the minimum transfer price the selling division would be willing to accept is

• A)£120.
• B)£75.
• C)£50.
• D)£30.

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Definitions:

Social Class

A division of a society based on social and economic status.

Social Strata

Layers within a society, formed based on various criteria such as wealth, occupation, and education, which define a person's social standing or class.

Pecking Order

A social hierarchy among a group, where individuals or entities are ranked relative to each other.

Luxury-Goods Spending

The expenditure on products and services that are considered high-quality, prestigious, and often more expensive than necessary.