The Kelso Division Produces and Sells a Product to External

question 105

Multiple Choice

The Kelso Division produces and sells a product to external and internal customers. Per-unit information about its operations include: $\begin{array}{l}\begin{array}{lr}\text { Selling price per unit to external customers } & \$ 250 \\\text { Variable manufacturing costs per unit } & 115 \\\text { Fixed manufacturing overhead costs per unit } &70\end{array}\\\end{array}$
If Kelso has sufficient excess capacity to meet internal demand, what should be the transfer price for Kelso's product?

• A) $245
• B) $250
• C) $115
• D) $185

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Definitions:

Integuments

Layers or coverings of an organism or organ, serving to protect or enclose, especially the outer layer of seeds or the skin of humans and animals.

Megasporangium

A plant structure that produces megaspores, which develop into female gametophytes in seed plants and certain ferns.

Ovules

Small structures within the ovary of seed plants that develop into seeds upon fertilization.

Over-The-Counter

Refers to drugs or medications that can be purchased without a prescription, available directly to consumers.