Division M Makes a Part That It Sells to Customers

question 47

Multiple Choice

Division M makes a part that it sells to customers outside of the company. Data concerning this part appear below: Division O of the same company would like to use the part manufactured by Division M in one of its products. Division O currently purchases a similar part made by an outside company for $70 per unit and would substitute the part made by Division M. Division O requires 5,000 units of the part each period. Division M can sell every unit it produces on the outside market. What should be the lowest acceptable transfer price from the perspective of Division O?

• A) $75
• B) $66
• C) $16
• D) $50
• E) $25

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Definitions:

Probing Questions

Questions designed to elicit more detailed or deeper responses, often used in interviews and qualitative research to clarify or expand upon initial answers.

Lived Experience

The personal knowledge and insights gained through one's own life events and situations.

Complete Observer

A research role where the observer does not interact with the participants and remains unnoticed.

Observer-as-participant

A role taken by a researcher where they openly interact with study participants while still maintaining a primary focus on observing and collecting data.