Answer the Following Question(s)using the Information Below

question 29

Multiple Choice

Answer the following question(s) using the information below.Cool Air Ltd.manufactures only one type of air conditioner and has two divisions, the Compressor Division, and the Assembly Division.The Compressor Division manufactures compressors for the Assembly Division, which completes the air conditioner and sells them to retailers.The Compressor Division "sells" compressors to the Assembly Division.The market price for the Assembly Division to purchase a compressor is $77.(Ignore changes in inventory.) The fixed costs for the Compressor Division are assumed to be the same over the range of 5,000-10,000 units.The fixed costs for the Assembly Division are assumed to be $15.00 per unit at 10,000 units.Compressor's costs per compressor are:
Assembly's costs per completed air conditioner are:

-What is the transfer price per compressor from the Compressor Division to the Assembly Division if the method used to place a value on each compressor is 150% of variable costs?

• A)$81.75
• B)$77.00
• C)$9.00
• D)$72.75
• E)$51.00

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Definitions:

Net Income

The total earnings of a company after deducting all expenses, taxes, and costs from its total revenues, indicating the company's profitability over a particular period.

Commercial Fishing Boat

A vessel used for catching fish commercially for profit, often equipped with specialized fishing gear.

New Stock

New stock refers to shares that a company issues to the public for the first time, typically through an initial public offering (IPO) to raise capital.

Earnings After Tax

The net income a company retains after deducting all its expenses, including taxes, highlighting its profitability.