(Appendix 11A) Fingado Products, Inc

question 84

Multiple Choice

(Appendix 11A) Fingado Products, Inc., has a Detector Division that manufactures and sells a number of products, including a standard detector that could be used by another division in the company, the Commercial Security Division, in one of its products. Data concerning that detector appear below:
The Commercial Security Division is currently purchasing 6,000 of these detectors per year from an overseas supplier at a cost of $91 per detector.
-What is the maximum price that the Commercial Security Division should be willing to pay for detectors transferred from the Detector Division?

• A) $83 per unit
• B) $51 per unit
• C) $91 per unit
• D) $32 per unit

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Definitions:

Net Income

The financial gain of a company post deduction of taxes and all costs from its revenue.

Common Shares

Equity securities that represent ownership in a corporation, providing voting rights and a share in the company's profits through dividends.

Basic Earnings

Typically refers to basic earnings per share, which is a measure of the amount of profit attributable to each outstanding share of a company's common stock.

Reacquired

Refers to assets or securities that have been repurchased or bought back by the company that originally issued them.