Use the Following Information for Questions

question 87

Multiple Choice

Use the following information for questions
The Wood Division of Fir Products, Inc. manufactures rubber moldings and sells them externally for $55. Its variable cost is $25 per unit, and its fixed cost per unit is $7. Fir's president wants the Wood Division to transfer 5,000 units to another company division at a price of $32.
-Assuming the Wood Division does not have any available capacity, the minimum transfer price it should accept is

• A) $7.
• B) $25.
• C) $32.
• D) $55.

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Definitions:

Direct Distribution

A strategy where products are sent directly from the manufacturer to the consumer without intermediary distributors or retailers.

Cross-Docks

Warehouse operations where incoming shipments are directly transferred to outgoing vehicles, minimizing storage and handling.

Capabilities

The skills, knowledge, tools, and other resources that an organization or individual possesses to perform a given task or achieve a specific goal.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.