Calculate and Compare the Difference in Overall Corporate Net Income

question 37

Multiple Choice

Calculate and compare the difference in overall corporate net income between Scenario A and Scenario B if the Assembly Division sells 100,000 pairs of shoes for $120 per pair to customers. Scenario A: Negotiated transfer price of $30 per pair of soles
Scenario B: Market-based transfer price

• A)$1,000,000 more net income under Scenario A
• B)$1,000,000 of net income using Scenario B
• C)$200,000 of net income using Scenario A
• D)None of the above is correct.

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Definitions:

Superior Innovation

Exceptionally advanced or novel changes in products, processes, or ideas that significantly surpass current standards or practices.

Financial Performance

A measure of how well a company is using its assets to generate profits and manage its financial resources.

Expanded Bureaucracy

Increased complexity and expansion of organizational structures and procedures often resulting in inefficiency.

Modular Organizations

Organizations structured in such a way that they can be easily reorganized, adapted, or resized by adding or removing modules, or discrete units, without affecting the overall system.