WAX-D Inc Has a Division That Manufactures a Component That Sells

question 46

Multiple Choice

WAX-D Inc. has a division that manufactures a component that sells for $150 and has a variable cost of $45. Another division of the company wants to purchase the component. Fixed cost per unit of component is $25. What is the minimum transfer price if the division is operating at capacity?

• A)$150
• B)$45
• C)$55
• D)$140

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Definitions:

Liquidation

The winding-up process when a partnership goes out of business.

Dishonored Note

A promissory note that has not been paid at maturity or is in default.

Due

Describes obligations or payments that are scheduled to be paid or completed by a certain date.

Not Paid

Refers to invoices or debts that have not been settled or fulfilled as per their due dates.