Use the Following Information for the Next 2 Questions

question 6

Multiple Choice

Use the following information for the next 2 questions.
The Kelso Division produces and sells a product to external and internal customers. Per-unit information about its operations include:
-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:

Non-price Competition

Strategies used by companies to attract customers through methods other than lowering prices, such as product differentiation and marketing.

Profit-maximizing

A strategy or point where a firm reaches its highest possible profit under given market conditions, taking into account costs and revenue.

Loss

A situation in which a business's expenses exceed its revenues over a specific period, resulting in negative profit.

Price Discrimination

A pricing strategy where a company charges different prices for the same product or service in different markets or to different segments of consumers, based on willingness to pay.