Use the Following Scenario to Answer Thefollowing Questions

question 71

Multiple Choice

Use the following scenario to answer thefollowing questions:
An economy has two workers,Smith and Ricardo.Each day they work,Smith can produce 4 computers or 16 smartphones,and Ricardo can produce 6 computers or 12 smartphones.
-If Smith and Ricardo each spent half of his time producing computers and the other half producing smartphones,what would be the total output per day?

• A) 4 computers and 12 smartphones
• B) 5 computers and 14 smartphones
• C) 6 computers and 16 smartphones
• D) 8 computers and 22 smartphones
• E) 10 computers and 28 smartphones

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Definitions:

Transfer Price

The price at which goods and services are sold between divisions within the same company, used for internal sales and profit allocation.

Variable Cost

Costs that change in proportion to the goods or services that a business produces.

General Transfer-Pricing Rule

A framework or methodology used to determine the price for goods or services transferred between divisions or subsidiaries of the same company.

Goal Congruence

A condition in which the goals of the organization's different members or departments align and support the overall objectives of the organization.