Fois Company Has Two Divisions, Division X and Division Y

question 44

Multiple Choice

Fois Company has two divisions, Division X and Division Y. Division X has a production capacity of 5,000 units of a particular part per month. Division X sells 4,400 units of the part each month to outside customers at a contribution margin of $56 per unit. Division Y would like to buy 800 units of the part each month from Division X. In computing the lowest acceptable transfer price from the perspective of the selling division, the lost contribution margin per unit portion of the transfer price computation would be:

• A) $56.00 per unit
• B) $30.00 per unit
• C) $14.00 per unit
• D) $25.00 per unit

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Definitions:

Norm Formation

The process by which new norms or standards of behavior are established and adopted within a social group.

Sherif's Study

A series of experiments by Muzafer Sherif that investigated how social norms and group dynamics influence behavior, notably through the Robbers Cave Experiment.

Administering Electric Shocks

A procedure often used in psychological experiments where subjects are given the ability to deliver an electric shock to another participant or themselves under certain conditions.

Milgram's Study

A series of social psychology experiments conducted by Stanley Milgram, demonstrating individuals' obedience to authority figures.