Kent Company Records Reveal the Following: the Variable Costs

question 121

Multiple Choice

Kent Company records reveal the following: The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier. If Division X is working at full capacity, the best transfer price from the viewpoint of the company as a whole would be:

• A) $24
• B) $32
• C) $8
• D) $42

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Definitions:

Unfettered Free Markets

Economic systems with minimal or no government intervention, where the forces of supply and demand are allowed to determine production, consumption, and price levels freely.

Libertarianism

A philosophical view that holds that individuals’ liberty is fundamentally important and that government must respect its citizens’ rights, understood as “negative” rights (that is, rights to act without interference so long as one’s actions do not interfere with the rights of others). Among the negative rights libertarians defend are the right to keep what one has or has earned, and the right to be free from government interference in all matters except when absolutely necessary to the general good.

Communitarian

Communitarian refers to a philosophical and social ideology emphasizing the importance of community and collective interests above individual rights.

Inequality

The state of not being equal, especially in status, rights, and opportunities, often focusing on issues related to social, economic, or political disparity.