The West and East Divisions Are Part of the Same

question 44

Multiple Choice

The West and East Divisions are part of the same company.Currently the East Division buys a part from West Division for $384 per unit.The West Division wants to increase the price of the part it sells to East Division by $96 to $480.The manager of the East Division has stated that he cannot pay that much insofar as the division's profit goes below zero.The manager of the East Division can buy the part from an outside supplier for $448 per unit.The cost data pertaining to the part is supplied by the West Division: If West Division does not produce the parts for the East Division,it will be able to avoid one-third of the fixed manufacturing overhead costs.The West Division has excess capacity but no alternative uses for the facilities.What is the minimum transfer price per unit that West Division should charge East Division?

• A)$376
• B)$390
• C)$448
• D)$480

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Definitions:

Romantic Love

An intense, positive emotion that involves sexual attraction, feelings of caring, and the belief that one is in love.

Whirlwind Courtship

A rapid and intense beginning to a romantic relationship, where commitments such as engagement or marriage occur shortly after meeting.

Selective Exposure

Deliberately seeking and attending to information that is consistent with one’s attitudes.

Social Facilitation

The tendency for people to perform differently when in the presence of others than when alone, typically improving on simple or well-practiced tasks and performing worse on complex or new ones.