Raven,Inchas a Division That Manufactures a Component That Sells for $190

question 92

Multiple Choice

Raven,Inc.has a division that manufactures a component that sells for $190 and has a variable cost of $35.Another division of the company wants to purchase the component.Fixed cost per unit of the component is $22.What is the minimum transfer price if the division is operating below its capacity?

• A)$190
• B)$35
• C)$57
• D)$22

---

Definitions:

Utility

a measure of satisfaction or happiness that a person derives from consuming goods and services.

Satisfaction

The level of contentment or fulfillment received from consuming a product or service.

Usefulness

The ability or quality of being able to serve a purpose effectively or efficiently.

Utility

A term in economics that refers to the total satisfaction received from consuming a good or service.