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Use the Following Information for the Next 3 Questions

question 80

Multiple Choice

Use the following information for the next 3 questions.
Division X sells organic high-gluten flour to Division Y. Division X incurs costs of $0.375 per pound of flour. Division Y makes loaves of bread that sell for $2.50 each. Division Y incurs costs of $1.25 per loaf, excluding the cost of the flour. Each loaf of bread uses one-half pound of flour.
-What is the operating income per loaf for Division Y if the transfer price is set at $0.625 per pound for flour?

Learn the implications of departmental contribution to overhead and how it affects overall corporate finances.

Identify and understand the roles and responsibilities within organizational structures relevant to accounting and finance.

Understand the concepts of joint cost allocation and its impact on product costing.

Apply relative market value and physical quantities methods for joint cost allocation.

Definitions:

Discrimination Training

A process in behavioral psychology where an individual learns to respond differently to various stimuli based on their differences.

Generalization

is the process of applying the response to one stimulus to other similar stimuli, common in both learning theory and everyday life.

Latent Learning

Learning that occurs without any obvious reinforcement and is not demonstrated until an incentive is provided.

Tolman

A psychologist known for his work on cognitive maps and latent learning in rats, suggesting that behavior is more goal-oriented than mechanistic.