(Appendix 11A) Fregozo Products, Inc

question 36

Multiple Choice

(Appendix 11A) Fregozo 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 8,000 of these connectors per year from an overseas supplier at a cost of $45 per connector.
-Assume that the Valve Division is selling all of the valves it can produce to outside customers.Also assume that $10 in variable expenses can be avoided on transfers within the company due to reduced shipping and selling costs.What should be the minimum acceptable transfer price for the valves from the standpoint of the Valve Division?

• A) $31 per unit
• B) $54 per unit
• C) $44 per unit
• D) $45 per unit

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Definitions:

Digestive Activity

The complex process of breaking down food into absorbable components in the digestive system.

Salivary Activity

The production and release of saliva from the salivary glands in the mouth, which aids in digestion and helps maintain oral health.

Sympathetic Nervous System

Part of the autonomic nervous system that activates the body's rapid involuntary response to dangerous or stressful situations, often referred to as "fight or flight" response.

Parasympathetic Nervous System

A division of the autonomic nervous system that promotes relaxation and functions under normal, non-stressful conditions.