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

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Definitions:

Available-for-sale Securities

Financial assets intended to be sold off before they mature or in response to changes in market conditions, not classified as held-to-maturity or trading securities.

Market Value

The current price at which an asset or service can be bought or sold in the open market.

Common Stock

Common stock represents ownership shares in a corporation, entitling holders to vote at shareholder meetings and receive dividends.

Dividends

Disbursements from a company to its owners, typically representing a share of the earnings.