The Vega Division of Ace Company Makes Wheels Which Can

question 17

Multiple Choice

The Vega Division of Ace Company makes wheels which can either be sold to outside customers or transferred to the Walsh Division of Ace Company. Last month the Walsh Division bought all 4,000 of its wheels from the Vega Division for $42 each. The following data are available from last month's operations for the Vega Company: If the Vega Division sells wheels to the Walsh Division, Vega can avoid $2 per wheel in sales commissions. An outside supplier has offered to supply wheels to the Walsh Division for $41 each.
-What is the maximum price per wheel that Walsh should be willing to pay Vega?

• A) $28
• B) $41
• C) $42
• D) $45

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Definitions:

Statute of Frauds

A legal principle that requires certain types of contracts to be in writing and signed by the parties involved to be legally enforceable.

Legal Studies Lecturer

An academic professional specializing in the teaching and research of law and its various branches.

Secondary Promise

A guarantee or promise that is auxiliary or supplementary to a primary promise in a contractual agreement.

Primary Promise

A fundamental obligation in a contract that is central to the agreement's purpose.