Figure 12-3 Quinn Has Capacity to Make 950,000 Zippers Per Year, but \\
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question 82

Multiple Choice

Figure 12-3 $\begin{array}{ll}\text { Direct materials } & \$ 0.23 \\\text { Direct labor } & \$ 0.20 \\\text { Variable overhead } & \$ 0.95 \\\text { Fixed overhead } & \$ 1.32 \\\text { Total } & \$ 2.70\end{array}$ Quinn has capacity to make 950,000 zippers per year, but due to a soft market, only plans to produce and sell 620,000 zippers next year. LeatherStuff currently buys zippers from an outside supplier for $3.50 each (the same price that Style receives) .
-Refer to Figure 12-4. Assume that Quinn allows negotiated transfer pricing. What is the ceiling of the bargaining range and which division sets it?

• A) $3.50; Style
• B) $3.50; LeatherStuff
• C) $2.70; Style
• D) $2.70; LeatherStuff
• E) $1.38; Style

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Definitions:

Market Wage

The average wage earned by workers in a specific market or industry, determined by the supply and demand for labor in that market.

Market Price

The current price at which an asset or service can be bought or sold in a particular market, determined by supply and demand forces.

Make Money

The process of earning a financial profit or income.

Informed Citizen

An individual who is well-informed about their rights, responsibilities, and current events, enabling them to participate effectively in civic and democratic processes.