The Post Division of the M $\$ 1.50$ Each the Following Data Are Available for Last Year's Activities

question 186

Multiple Choice

The Post Division of the M.T. Woodhead Company produces basic posts that can be sold t outside customers or sold to the Lamp Division of the M.T. Woodhead Company. Last year the Lamp Division bought all of its 25,000 posts from the Post Division at $\$ 1.50$ each. The following data are available for last year's activities of the Post Division:
$\begin{array}{|l|r|}\hline \text { Capacity in Units } & 300,000 \text { posts } \\\hline \text { Selling Price per Post to Outside Customers } & \$ 1.75 \\\hline \text { Variable Costs per Post } & \$ 0.90 \\\hline \text { Fixed Costs, Total } & \$ 150,000 \\\hline\end{array}$
$\text { The total fixed costs would be the same for all the alternatives considered below. }$
- Suppose there is ample capacity so that transfers of the posts to the Lamp Division do not cut into sales to outside customers.What is the lowest transfer price that would not reduce the operating income of the Post Division?

• A) $0.90.
• B) $1.35.
• C) $1.41.
• D) $1.75.

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Definitions:

Motivation

The psychological processes that arouse and direct goal-oriented behavior.

Maslow's Hierarchy

is a psychological theory proposing that human needs are arranged in a hierarchy, from basic physiological needs to the need for self-actualization.

Valenced Reactions

Emotional responses that are categorized as either positive or negative in nature, influenced by personal experiences, attitudes, and perceptions.

Arousal

A physiological and psychological state of being awake, alert, and engaged.