Answer the Following Question(s)using the Information Below

question 9

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 transfer price per compressor is 110% of full costs?

• A)$84.70
• B)$80.00
• C)$76.45
• D)$59.95
• E)$77.00

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Definitions:

Protestant Ethic

A concept in sociology that associates the rise of capitalism with Protestant values of hard work, frugality, and diligence.

Spirit of Capitalism

A term from Max Weber's sociology referring to the set of ethical and cultural values that encourage hard work, frugality, and efficiency in pursuit of economic success.

Iron Cage

A concept introduced by Max Weber to describe the increased rationalization inherent in social life, particularly in Western capitalist societies, leading to individuals feeling trapped by systems and bureaucracy.

Rationality

The quality or state of being reasonable, based on facts or reason, guiding behavior or beliefs by logic rather than emotion or tradition.