(Appendix 11A) Royal Products, Inc

question 12

Multiple Choice

(Appendix 11A) Royal Products, Inc., has a Connector Division that manufactures and sells a number of products, including a standard connector that could be used by another division in the company, the Transmission Division, in one of its products. Data concerning that connector appear below:
The Transmission Division is currently purchasing 6,000 of these connectors per year from an overseas supplier at a cost of $65 per connector.
-Assume that the Connector Division has enough idle capacity to handle all of the Transmission Division's needs.What should be the minimum acceptable transfer price for the connectors from the standpoint of the Connector Division?

• A) $21 per unit
• B) $56 per unit
• C) $69 per unit
• D) $65 per unit

---

Definitions:

Premium Payment

The amount paid for an insurance policy, either as a lump sum or in installments.

Cash Value

The amount available in cash for an insurance policy or investment account, often accessible to the policyholder or investor.

Corporate Bonds

Debt securities issued by corporations to raise capital, with the expectation that they will pay back the principal along with interest.

Certificate of Deposit

A savings certificate with a fixed maturity date and specified fixed interest rate that is issued by banks.