Division X of Charter Corporation Makes and Sells a Single

question 182

Multiple Choice

Division X of Charter Corporation makes and sells a single product that is used by manufacturers of forklift trucks.Presently,it sells 12,000 units per year to outside customers at $24 per unit.The annual capacity is 20,000 units,and the variable cost to make each unit is $16.Division Y of Charter Corporation would like to buy 10,000 units a year from Division X to use in its products.There would be no cost savings from transferring the units within the company rather than selling them on the outside market.What should be the lowest acceptable transfer price from the perspective of Division X?

• A) $16.00.
• B) $17.60.
• C) $21.40.
• D) $24.00.

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Definitions:

Self-Control Problems

Issues arising from an individual's inability to regulate their behavior or choices, often leading to adverse outcomes.

Dictator Game

A psychological and economic experiment where one person (the "dictator") determines how to split an endowment (usually money) between themselves and another participant.

Behavioral Economists

Academics who study the role of psychological, cognitive, emotional, cultural, and social influences on the economic choices of individuals and institutions.

Time Inconsistency

A situation where a person's preferences change over time, leading to decisions that might contradict earlier plans or promises.