Use the Following Information for the Next 2 Questions

question 97

Multiple Choice

Use the following information for the next 2 questions.
The Machining Division has a capacity of 2,000 units. Its sales and cost data are:
-If the Assembly Division is currently buying from an outside supplier at $98 per unit, what will be the effect on overall company profits if internal sales take place at the optimum transfer price?

• A) $7,000 increase
• B) $7,300 increase
• C) $300 increase
• D) There is no effect

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Definitions:

Customer Returns

Goods returned to a seller by the purchaser due to defects, dissatisfaction, or other reasons.

Financial Perspective

A viewpoint focusing on how well a company is performing financially, often measured through financial metrics and goals.

Satisfying Customers

The process of meeting and exceeding customer expectations to foster loyalty and repeat business.

Financial Measures

Quantitative indicators used to assess the financial health, performance, and viability of a business or investment.