(Appendix 11A) Two of the Decentralized Divisions of Gamberi Electronics

question 87

Multiple Choice

(Appendix 11A) Two of the decentralized divisions of Gamberi Electronics Corporation are the Plastics Division and the Components Division. The Plastics Division sells molded parts to both the Components Division and to customers outside the corporation.
-Assume that the Plastics Division is currently operating with idle capacity.Also assume that the Components Division wants to purchase from Plastics all of the additional parts that could be made with this idle capacity.In order to increase its current level of profitability,the Plastics Division should accept any transfer price on these additional parts that is above the:

• A) variable cost of the additional parts.
• B) full (absorption) cost of the additional parts.
• C) variable cost of the additional parts plus the lost contribution margin on all units that could no longer be sold to customers outside the corporation.
• D) full (absorption) cost of the additional parts plus the lost contribution margin on all units that could no longer be sold to customers outside the corporation.

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Definitions:

Religious Beliefs

The specific spiritual principles held by an individual or community, centered around faith in a higher power or moral values.

Powhatan

A Native American chiefdom in Virginia, known for its interaction with the English settlers of Jamestown in the early 17th century and for its leader, Chief Powhatan.

Consolidate Power

Refers to the process by which a leader, government, or organization increases its control over decision-making and authority, often at the expense of others' participation.

Divine Beings

Spiritual or celestial entities believed in many religions and mythologies to have powers beyond those of ordinary humans and to influence the natural world and human fate.