Bacot Products, Incorporated, Has a Valve Division That Manufactures and Sells

question 35

Multiple Choice

Bacot Products, Incorporated, has a Valve Division that manufactures and sells a number of products, including a standard valve that could be used by another division in the company, the Pump Division, in one of its products. Data concerning that valve appear below: The Pump Division is currently purchasing 8,000 of these valves per year from an overseas supplier at a cost of $47 per valve.Assume that the Valve Division is selling all of the valves it can produce to outside customers. What should be the minimum acceptable transfer price for the valves from the standpoint of the Valve Division?

• A) $47 per unit
• B) $28 per unit
• C) $45 per unit
• D) $53 per unit

Apply principles of paragraph development in business writing contexts.

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Definitions:

Effective Interest Method

A method of calculating the amortized cost of a bond and of allocating interest income over the bond's life, reflecting the constant rate of interest over the period.

Bond Discounts

The divergence between the stated value of a bond and its decreased sale price.

Bond Premiums

The amount by which the market price of a bond exceeds its face value, often due to interest rates falling after the bond issuance.

Bond Indenture

A legal contract outlining the terms and conditions under which a bond is issued, including the interest rate and maturity date.