Management of the Catering Company Would Like the Food Division

question 26

Multiple Choice

Management of the Catering Company would like the Food Division to transfer 10,000 cans of its final product to the Restaurant Division for $80.The Food Division sells the product to customers for $150 per unit.The Food Division's variable cost per unit is $55 and its fixed cost per unit is $25.The Food Division has 10,000 units available capacity.What is the minimum transfer price the Food Division should accept?

• A)$25
• B)$55
• C)$80
• D)$150

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Definitions:

Prestige Pricing

A pricing strategy where prices are set higher than average to present the image of exclusivity and high quality.

Pricing Strategy

An approach or method used by a business to determine the best price for its products or services to maximize profitability and meet customer and market demand.

Breakeven Analysis

A financial calculation to determine the number of units or revenue needed to cover total costs, at which point a business neither makes a profit nor suffers a loss.

Quality Of Data

The degree to which data is accurate, complete, reliable, and relevant to the intended usage.