Division A, Which Is Operating at Capacity, Produces a Component

question 125

Multiple Choice

Division A, which is operating at capacity, produces a component that currently sells in a competitive market for $25 per unit. At the current level of production, the fixed cost of producing this component is $8 per unit and the variable cost is $10 per unit. Division B would like to purchase this component from Division A. The price that Division A should charge Division B for this component is:

• A) $10 per unit.
• B) $18 per unit.
• C) $20 per unit.
• D) $25 per unit.
• E) $35 per unit.

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Definitions:

High Collectivism

A social pattern in which individuals prioritize the goals and well-being of the group over personal goals or desires.

Power Distance

A cultural dimension that reflects the degree to which less powerful members of organizations and institutions accept and expect that power is distributed unequally.

Consensus-Oriented

A decision-making process that seeks widespread agreement and support among all stakeholders or group members.

Status

The relative social, professional, or other standing of someone or something, often influencing respect, influence, and access to resources or opportunities.