Simmons Bedding Company Manufactures an Array of Bedding-Related Products, Including

question 100

Essay

Simmons Bedding Company manufactures an array of bedding-related products, including pillows. The Cover Division of Simmons makes covers, while the Assembly Division of the company produces finished pillows. The covers can be sold separately for $10.00 a piece, while the pillows sell for $12.00 per unit. For performance-evaluation purposes, these two divisions are treated as investment centers. Financial results from the most recent accounting period are as follows:
Required:
1. What is the operating income for each of the two divisions and for the company as a whole? (Use market value as the transfer price.)
2. Do you think each of the two divisional managers is happy with this transfer-pricing method? Explain.

Interpret the results of empirical research studies on market efficiency and stock performance.

Distinguish between the three forms of market efficiency and their information sets.

Understand the dynamic nature of consumer market segments and subcultures.

Recognize the role of individuals within the purchase decision-making process.

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Definitions:

Effective Annual Yield

This refers to the real return on an investment, taking into account the effects of compounding interest over a year.

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturity date, including all payments of interest and principal.

Semi-annually

Semi-annually refers to an event or action occurring twice a year, or every six months.

Coupon Rate

The interest rate stated on a bond when it's issued which indicates the percentage of the principal to be paid annually as interest.