The Manager of Paul's Fruit and Vegetable Store Is Considering

question 33

Multiple Choice

The manager of Paul's fruit and vegetable store is considering the purchase of a new seedless watermelon from a wholesale distributor. Since this seedless watermelon costs $4, will sell for $7, and is highly perishable, he only expects to sell between six and nine of them. What is the payoff value for the purchase of eight watermelons when the demand is for eight or more watermelons?

• A) 17
• B) 21
• C) 24
• D) 10

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Definitions:

Transfer Price

The cost at which products, services, or intellectual property are exchanged between departments inside the same corporation.

Fixed Costs

Expenses that remain constant regardless of the amount of output or sales, including lease payments, employee wages, and insurance costs.

Average Costs

The total costs divided by the total quantity produced, expressing the cost per unit of goods or services.

Transfer Price

The price at which goods, services, or intellectual property are traded between divisions within the same organization.