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

question 27

Multiple Choice

Use the information below to answer the following question(s) .The Burnaby Division of Columbia Ltd.produces and sells component parts.Its variable costs per unit are $80 for direct materials, $32 for direct labour and $18 for variable factory overhead.It currently can sell it components on the outside market at a price of $165/unit.Fixed overhead costs are $22 per unit based on a denominator volume of 180,000 units.
-The Surrey Division of Columbia Ltd.has approached the Burnaby Division and requested that it supply 25,000 units of the component at a transfer price of $150.Assuming Burnaby Division has idle capacity, what is the transfer price the Burnaby Division should agree to accept?

• A)$165
• B)$150
• C)$152
• D)$130
• E)$118

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Definitions:

Subjective Discomfort

The personal and often unquantifiable feeling of distress or unease that a person may experience.

Statistical Rarity

A term used to describe something that occurs infrequently or is uncommon within a given statistical population.

Behavioral Therapist

A mental health professional specializing in techniques and interventions based on behavioral psychology principles to change maladaptive behaviors.

Learned Behaviors

Actions or responses that are developed as a result of experience or conditioning, rather than being innate or instinctual.