McKenna's Florida Division Is Currently Purchasing a Part from an Outside

question 13

Multiple Choice

McKenna's Florida Division is currently purchasing a part from an outside supplier.The company's Alabama Division,which has excess capacity,makes and sells this part for external customers at a variable cost of $22 and a selling price of $34.If Alabama begins sales to Florida,it (1) will use the general transfer-pricing rule and (2) will be able to reduce variable cost on internal transfers by $4.If sales to outsiders will not be affected,Alabama would establish a transfer price of:

• A)$18.
• B)$22.
• C)$30.
• D)$34.
• E)some other amount.

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Definitions:

Dysphasia

A language disorder marked by impairment in the ability to produce or comprehend spoken or written language due to brain injury.

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An injury appearing as a purple or dark area on the skin, caused by broken blood vessels under the skin without the skin being broken.

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Having a break or crack in a bone or hard tissue.