Use the Information Below to Answer the Following Question(s)

question 143

Multiple Choice

Use the information below to answer the following question(s) .Soft Cushion Company is highly decentralized.Each division is empowered to make its own sales decisions.The Assembly Division can purchase cushion stuffing from the Production Division or from external suppliers.The Production Division has been the major supplier of stuffing in recent years.The Assembly Division has announced that two external suppliers will be used to purchase the stuffing at $20 per kilogram for the next year.The Production Division recently increased its unit price to $40.The manager of the Production Division presented the following information; variable cost $32, fixed cost $8, to top management in order to attempt to force the Assembly Division to purchase the stuffing internally.The Assembly Division purchases 20,000 kg per month.
-In analyzing transfer prices

• A)the buyer will not willingly purchase a product for less than the incremental costs incurred to manufacture the product internally.
• B)the seller should not sell a product for less than the incremental costs incurred to make the product.
• C)the buyer will willingly pay more than the ceiling transfer price.
• D)the buyer will not pay less than the ceiling transfer price.
• E)the buyer will not pay the incremental costs.

---

Definitions:

Codes of Ethics

Written policies or rules that outline expected moral behavior and guide decision-making within an organization.

Sarbanes-Oxley Act

A U.S. federal law established to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to securities laws, and for other purposes.

Securities Fraud

Deceptive practices in the stock and commodities markets, including misleading investors or manipulating stock prices.

Corporate Fraud

Illegal activities undertaken by individuals or companies for financial gain, often through deceptive practices.