Division S Sold a Part to Both Division P and Outside

question 41

Multiple Choice

Division S sold a part to both Division P and outside customers last year. The revenues from these sales were $30,000 (1,000 units) and $35,000 (1,000 units) , respectively. Next year, S plans to increase the unit sales price to $42 and wants a proportionate increase in the sales price to Division P. The unit costs are $9 variable and $15 fixed. If Division P does not agree to the price increase, 50% of Division S's fixed costs will be eliminated.
What is the highest price Division P would be willing to pay for external purchases?

• A) $30.00
• B) $36.00
• C) $16.50
• D) $28.50

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Definitions:

Psychology Text

A written or digital publication concerning the study of the mind and behavior, often used for educational purposes.

Cognitive Dissonance

A psychological state that describes the uncomfortable feeling when a person holds two or more conflicting cognitions, beliefs, attitudes, or values at the same time.

Operant Conditioning

A type of learning in which the consequences of behavior are manipulated so as to increase or decrease the frequency of an existing response or to shape an entirely new response.

Dishonest Coworker

A colleague who lacks integrity and honesty, possibly engaging in deception or fraud in the workplace.