(Appendix 11A) Wetherald Products, Inc

question 31

Multiple Choice

(Appendix 11A) Wetherald Products, Inc., has a Pump Division that manufactures and sells a number of products, including a standard pump that could be used by another division in the company, the Pool Products Division, in one of its products. Data concerning that pump appear below:
The Pool Products Division is currently purchasing 4,000 of these pumps per year from an overseas supplier at a cost of $74 per pump.
-Assume that the Pump Division has enough idle capacity to handle all of the Pool Products Division's needs.What should be the minimum acceptable transfer price for the pumps from the standpoint of the Pump Division?

• A) $74 per unit
• B) $53 per unit
• C) $64 per unit
• D) $82 per unit

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Definitions:

Mutually Exclusive

A condition in probability and statistics where two events cannot both occur at the same time.

Bayes' Rule

A theorem used in probability to update the probability of a hypothesis as more information becomes available.

Posterior Probability

The probability of a hypothesis being true after taking into account new evidence or information.

Well-Shuffled Cards

A state in which the order of cards in a deck is randomized, ensuring that no predictable patterns interfere with the randomness of card games.