Use the Following Information to Answer Questions
Division a Produces

question 31

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 minimum transfer price per unit that Division A would be willing to accept?

• A)$10
• B)$11
• C)$38
• D)$40

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Definitions:

1648

The year that marked the end of the Thirty Years' War in Europe with the signing of the Peace of Westphalia, leading to a new political and religious order.

Fundamental Conflicts

Core disagreements or confrontations that are basic or essential to the nature of a situation, often driving the narrative or outcome.

Catholics and Protestants

Refer to the two major branches of Christianity that split during the Reformation, with distinct beliefs, practices, and governance.

Thirty Years' War

A devastating European conflict from 1618 to 1648, involving most of the continent's major powers, often seen as a series of interconnected religious, territorial, and dynastic wars.