Answer the Following Questions Using the Information Below

question 14

Multiple Choice

Answer the following questions using the information below:
Calculate the Division operating income for the AlphaShoe Company which manufactures only one type of shoe and has two divisions, the Sole Division, and the Assembly Division. The Sole Division manufactures soles for the Assembly Division, which completes the shoe and sells it to retailers. The Sole Division "sells" soles to the Assembly Division. The market price for the Assembly Division to purchase a pair of soles is $40. (Ignore changes in inventory.) The fixed costs for the Sole Division are assumed to be the same over the range of 40,000-100,000 units. The fixed costs for the Assembly Division are assumed to be $14 per pair at 100,000 units.

-What is the market-based transfer price per pair of soles from the Sole Division to the Assembly Division?

• A)$20
• B)$32
• C)$40
• D)$52

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Definitions:

Decision Confirmation

The process by which individuals seek to validate their choices through additional information or feedback from others.

Trial Close

A sales technique where the seller proposes a closing question or statement to gauge the buyer's readiness to complete the purchase.

Purchase Decision

The process by which a consumer selects a product or service over others based on various factors such as need, desire, price, and accessibility.

Limited Temporary Basis

A restricted and short-term arrangement or condition, often applied to agreements, access, or usage rights.