Answer the Following Questions Using the Information Below

question 64

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 transfer price per pair of soles from the Sole Division to the Assembly Division if the method used to place a value on each pair of soles is 180% of variable costs?

• A)$28.80
• B)$25.20
• C)$32.40
• D)$57.60

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Definitions:

Internal

Pertains to something situated on the inside, occurring within an individual's mind or internalizing within the entity it refers to.

External

Originating from or situated outside the self or the subject under consideration; refers to influences or factors that are not inherent.

Propriate Striving

An aspect of Gordon Allport's personality theory, focusing on the individual's striving for self-enhancement, mastery, and accomplishment.

Criteria

Standards or principles by which something is judged or decisions are made.