The Machining Division Has a Capacity of 2,000 Units The Machining Division Is Currently Selling 1,900 Units to Outside

question 48

Multiple Choice

The Machining Division has a capacity of 2,000 units. Its sales and cost data are: $$\begin{array} { l r } \text { Selling price per unit } & \$ 100 \\\text { Variable manufacturing costs per unit } & \$ 25 \\\text { Variable administrative costs per unit } & \$ 5 \\\text { Total fixed manufacturing overhead } & \$ 20,000 \\\text { Total fixed administrative costs } & \$ 5,000\end{array}$$ The Machining Division is currently selling 1,900 units to outside customers, and the Assembly Division wants to purchase 300 units from Machining. If the transaction takes place, the variable administrative costs per unit on the units transferred to Assembly will be $2/unit, not $5/unit. What should be the transfer price?

• A) $73.67
• B) $76.67
• C) $97.00
• D) $100.00

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Definitions:

Synovial Joint

Capsule-enclosed joint at which cartilage-covered ends of bones are separated by a fluid-filled space.

Muscle Fiber

The cylindrical, multinucleate cells that make up skeletal muscles, responsible for contracting to produce movement.

Myofibril

Within a muscle fiber, a threadlike array of proteins organized as a series of sarcomeres (contractile units).

Sarcomere

Contractile unit of muscle; an array of actin and myosin filaments arranged in parallel and bounded on either end by an array of cytoskeletal elements (a Z line).