Materials Used by Meeta-Products Inc

question 16

Multiple Choice

Materials used by Meeta-Products Inc.in producing Division A's product are currently purchased from outside suppliers at a cost of $12 per unit.However, the same materials are available from Division B.Division B has unused capacity and can produce the materials needed by Division A at a variable cost of $7 per unit.A transfer price of $9 per unit is established, and 35,000 units of material are transferred with no reduction in Division B's current sales. How much would Division B's operating income increase?

• A) $75,000
• B) $175,000
• C) $105,000
• D) $70,000

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Definitions:

Continuous Reinforcement

The giving of rewards each time a desired behaviour occurs.

Desired Behaviour

Specific actions or reactions that an organization aims to encourage or instill in its employees or members.

Punishment Effective

Punishment effective describes the extent to which a penalizing action achieves the desired outcome of altering behavior to conform to expected norms or rules.

Negative Reinforcement

The strengthening of behaviour by making the avoidance of an undesirable consequence contingent on its occurrence.