Use the Following Information to Answer Questions
Division a Produces

question 24

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 26,000 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)$10.00
• B)$14.60
• C)$16.00
• D)$40.00

Derive implications of elasticity for marketing and pricing strategies.

Explore the impact of elasticity on tax incidence.

Understand the concept of elasticity in economics and its applications to demand and supply.

Distinguish between different types of elasticity (price, income, cross-elasticity) and their implications.

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Definitions:

Paid-in Capital

Funds that are contributed to a corporation by investors in exchange for the corporation's stock, representing the funds raised by the company from equity, not from ongoing operations.

Common Stock Dividends Distributable

A liability account representing dividends declared by a company but not yet distributed to common stockholders.

Stock Split

A corporate action to increase the number of outstanding shares by dividing each share, which typically makes the stock more affordable.

Common Stock

A form of corporate equity ownership, representing a claim on a portion of the corporation's assets and earnings.