(Appendix 11A) Division P of the Nyers Company Makes a Part

question 77

Multiple Choice

(Appendix 11A) Division P of the Nyers Company makes a part that can either be sold to outside customers or transferred internally to Division Q for further processing. Annual data relating to this part are as follows:
Division Q of the Nyers Company requires 15,000 units per year and is currently paying an outside supplier $33 per unit. Consider each part below independently.
-If outside customers demand 80,000 units and if,by selling to Division Q,Division P could avoid $4 per unit in variable selling expense,then according to the formula in the text,what is the lowest acceptable transfer price from the viewpoint of the selling division?

• A) $35 per unit
• B) $21 per unit
• C) $31 per unit
• D) $33 per unit

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Definitions:

Media Regulation

The control or guidance of mass media by governments and other bodies to ensure compliance with laws, standards, and policies, often to protect public interest.

Horizontal Integration

A strategy where a company acquires or merges with other companies at the same level of the production process in the same or different industries to expand its operations or market.

Blood Glucose

The concentration of glucose present in the blood, critical for maintaining energy levels and metabolic functions in the body.

Hunger Stimulated

Refers to the condition of being prompted or induced to eat due to physiological cues of hunger.