Division C Makes a Part That It Sells to Customers

question 92

Multiple Choice

Division C makes a part that it sells to customers outside of the company.Data concerning this part appear below:
Division D of the same company would like to use the part manufactured by Division C in one of its products.Division D currently purchases a similar part made by an outside company for $79 per unit and would substitute the part made by Division C.Division D requires 1,000 units of the part each period.Division C has ample excess capacity to handle all of Division D's needs without any increase in fixed costs and without cutting into outside sales.According to the formula in the text,what is the lowest acceptable transfer price from the standpoint of the selling division?

• A) $75
• B) $79
• C) $54
• D) $69

---

Definitions:

Economic Success

The achievement of financial stability, growth, and prosperity within individual, business, or societal levels.

Discriminatory Immigration Policies

Governmental regulations and practices that unfairly restrict individuals from immigrating based on factors like race, nationality, religion, or socioeconomic status.

Educational Credentials

Certifications, diplomas, degrees, or qualifications used to indicate a person's educational achievements and qualifications.

Socially Constructed

Pertains to concepts, identities, or values that are created and given meaning through social interactions, norms, and cultural consensus, rather than being inherently natural or biological.