Figure 12-3 Quinn Has Capacity to Make 950,000 Zippers Per Year, but \\
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question 58

Multiple Choice

Figure 12-3 $\begin{array}{ll}\text { Direct materials } & \$ 0.23 \\\text { Direct labor } & \$ 0.20 \\\text { Variable overhead } & \$ 0.95 \\\text { Fixed overhead } & \$ 1.32 \\\text { Total } & \$ 2.70\end{array}$ Quinn has capacity to make 950,000 zippers per year, but due to a soft market, only plans to produce and sell 620,000 zippers next year. LeatherStuff currently buys zippers from an outside supplier for $3.50 each (the same price that Style receives) .
-Refer to Figure 12-4. Assume that Quinn allows negotiated transfer pricing. What is the floor of the bargaining range and which division sets it?

• A) $3.50; Style
• B) $2.70; LeatherStuff
• C) $2.70; Style
• D) $1.38; LeatherStuff
• E) $1.38; Style

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Definitions:

Hardball Tactics

Aggressive negotiation strategies focusing on gaining an advantage at the possible expense of damaging relationships.

Distributive Bargaining

A negotiation strategy focused on dividing a fixed amount of resources, often leading to a win-lose situation.

Powerful Negotiators

Individuals with significant influence, resources, or skills in negotiation processes.

Settlement

The resolution or agreement reached in a dispute, negotiation, or transaction.