Figure 20-4 the Simonds Division Produces a Component That Is Used by Used

question 7

Multiple Choice

Figure 20-4
The Simonds Division produces a component that is used by the Allen Division. The cost of manufacturing the component is as follows: ^aBased on a practical volume of 400,000 components
Other costs incurred by the Simonds Division are as follows: The component usually sells for £35 in the external market. The Simonds Division is capable of producing 500,000 components per year; however, only 400,000 components are expected to be sold next year. The variable selling expenses are avoidable if the component is sold internally.
The Allen Division has been buying the same component from an external supplier for £34 each. The Allen Division expects to use 50,000 units of the component next year. The manager of the Allen Division has offered to buy 50,000 units from the Simonds Division for £22.50 each.
-Refer to Figure 20-4. The maximum transfer price that the Allen Division would be willing to pay is

• A) £20.00.
• B) £25.00.
• C) £26.50.
• D) £34.00.

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Definitions:

High Growth Satisfaction

The high level of contentment and satisfaction experienced by individuals or organizations due to rapid expansion or success.

Core Job Characteristics

Fundamental attributes of a job that can affect an employee's work motivation and satisfaction, such as skill variety, task identity, task significance, autonomy, and feedback.

Horizontal Loading

An approach to job design that involves broadening the range of tasks performed by an employee to add variety and encourage skill development.

Form Natural Units

Organize or group elements based on inherent or intrinsic characteristics that naturally belong together.