(Appendix 11A) Zeilinger Products, Inc

question 86

Multiple Choice

(Appendix 11A) Zeilinger Products, Inc., has a Screen Division that manufactures and sells a number of products, including a standard screen that could be used by another division in the company, the Home Security Division, in one of its products. Data concerning that screen appear below:
The Home Security Division is currently purchasing 8,000 of these screens per year from an overseas supplier at a cost of $58 per screen.
-Assume that the Valve Division is selling all of the valves it can produce to outside customers.From the standpoint of the Valve Division,what is the lost contribution margin if the valves are transferred internally rather than sold to outside customers?

• A) $88,000
• B) $392,000
• C) $1,480,000
• D) $296,000

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Definitions:

Maximin Strategies

Decision-making strategies that aim to maximize the minimum gain that can be achieved, often used in situations of uncertainty or competitive scenarios.

Equilibrium Outcome

A state in a game where all players have chosen their strategies and no participant can gain by unilaterally changing their own strategy.

Prisoners' Dilemma

A scenario in game theory where individuals acting in their own self-interest pursue a course of action that does not result in the ideal outcome for any participant.

Maximin Strategy

A decision rule used in game theory and decision theory aiming to maximize the minimum payoff.