The Table and Chair Divisions Are Part of the Same

question 83

Multiple Choice

The Table and Chair Divisions are part of the same company. Currently the Chair Division buys a part from Table for $384. The Table Division wants to increase the price of the part it sells to Chair by $96 to $480. The manager of Chair has stated that it cannot afford to go that high, as it will decrease the division's profit to near zero. Chair can buy the part from an outside supplier for $448. The cost data for the Table Division is as follows: $\begin{array}{ll}\text { Direct materials } & \$ 136 \\\text { Direct labor } & 200 \\\text { Variable overhead } & 40 \\\text { Fixed overhead } & 42\end{array}$ If Table ceases to produce the parts for Chair, it will be able to avoid one- third of the fixed manufacturing overhead. The Table Division has excess capacity but no alternative uses for its facilities. is the minimum transfer price that should be charged.

• A) $480
• B) $390
• C) $448
• D) $376

---

Definitions:

Emotional Intelligence

The ability to perceive emotions accurately in oneself and others and to control and use one’s own emotions constructively.

Replicate

The act of duplicating or copying something.

Different Samples

Groups of subjects or participants selected for research, which may vary across studies in terms of demographics, behaviors, or conditions.

Cultures

The shared values, norms, languages, customs, and practices of groups of people that shape their social behavior and perspectives.