Use the Following Information to Answer Questions
Division a Produces

question 59

Multiple Choice

Use the following information to answer questions
Division A produces a product that it sells to the outside market.It has compiled the following:
$$\begin{array} { l l } \text { Variable manufacturing cost per unit } & \$ 10 \\\text { Variable selling costs per unit } & \$ 3 \\\text { Total fixed manufacturing costs } & \$ 150,000 \\\text { Total fixed selling costs } & \$ 30,000 \\\text { Per unit selling price to outside buyers } & \$ 40 \\\text { Capacity in units per year } & 30,000\end{array}$$
-Division B of the same company is currently buying an identical product from an outside provider for $38 per unit.It wishes to purchase 5,000 units per year from Division A.Division A is currently selling 25,000 units of the product per year.If the internal transfer is made, Division A will not incur any selling costs.What would be the maximum transfer price per unit that Division B would be willing to accept?

• A)$10
• B)$11
• C)$38
• D)$40

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Definitions:

Neuroticism

Personality trait characterized by anxiety, fear, moodiness, worry, envy, frustration, jealousy, and loneliness.

Openness

Refers to one's willingness to consider new ideas, be open to diverse experiences, and exhibit transparency in thoughts and actions.

Extroversion

A personality trait characterized by sociability, talkativeness, assertiveness, and high levels of emotional expressiveness.

The Big Five Model

A personality framework consisting of five broad dimensions used to describe human personality: openness, conscientiousness, extraversion, agreeableness, and neuroticism.