Division P of the Nyers Company Makes a Part That

question 139

Multiple Choice

Division P of the Nyers Company makes a part that can either be sold to outside customers or transferred internally to Division Q for further processing. Annual data relating to this part are as follows: Division Q of the Nyers Company requires 15,000 units per year and is currently paying an outside supplier $33 per unit. Consider each part below independently.If outside customers demand 80,000 units and if, by selling to Division Q, Division P could avoid $4 per unit in variable selling expense, then according to the formula in the text, what is the lowest acceptable transfer price from the viewpoint of the selling division?

• A) $33 per unit
• B) $27 per unit
• C) $28 per unit
• D) $29 per unit

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Definitions:

Water Constraint

A limitation or restriction on the availability or use of water resources in a certain area or for a specific purpose.

Disinfectants

Chemical agents used to eliminate or reduce harmful pathogens from surfaces, objects, or environments, contributing to infection control.

Hydrogen

A colorless, odorless, highly flammable gas, constituting the most abundant element in the universe and used in various industrial processes.

Oxygen

Oxygen is a chemical element with symbol O, essential for most life forms on Earth as part of the process of respiration and energy production within cells.