Answer the Following Question(s)using the Information Below

question 163

Multiple Choice

Answer the following question(s) using the information below.Delta Footwear Ltd.manufactures only one type of sandal and has two divisions, the Sole Division, and the Assembly Division.The Sole Division manufactures soles for the Assembly Division, which completes the sandal and sells it to retailers.The Sole Division "sells" soles to the Assembly Division.The market price for the Assembly Division to purchase a pair of soles is $18.(Ignore changes in inventory.) The per unit fixed costs are based on a production of 50,000 pairs of sandals.Sole's costs per pair of soles are:
Assembly's costs per completed pair of sandals are:

-What is the market-based transfer price per pair of soles from the Sole Division to the Assembly Division?

• A)$9
• B)$10
• C)$18
• D)$16
• E)$27

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Definitions:

Cost Function

A mathematical relationship that describes how the costs incurred by a firm change with various levels of output.

Profit-Maximizing

A strategy or approach taken by firms to adjust their production and pricing to achieve the highest possible profit.

Output

The amount of products or services generated by a business, sector, or nation during a specific period.

Auto Repairs

Services provided to fix or maintain vehicles to ensure they are in optimal working condition.