Answer the Following Questions Using the Information Below

question 104

Multiple Choice

Answer the following questions using the information below:
Calculate the Division operating income for the Artic Air Company which manufactures only one type of air conditioner and has two divisions, the Compressor Division, and the Assembly Division. The Compressor Division manufactures compressors for the Assembly Division, which completes the air conditioner and sells it to retailers. The Compressor Division "sells" compressors to the Assembly Division. The market price for the Assembly Division to purchase a compressor is $38.50. (Ignore changes in inventory.) The fixed costs for the Compressor Division are assumed to be the same over the range of 5,000-10,000 units. The fixed costs for the Assembly Division are assumed to be $7.50 per unit at 10,000 units.

-What is the transfer price per compressor from the Compressor Division to the Assembly Division if the transfer price per compressor is 110% of full costs?

• A)$42.35
• B)$40.00
• C)$38.23
• D)none of the items

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Definitions:

Minorities

Groups of individuals differing from the larger population in terms of race, religion, language, or other characteristics, often facing disproportionate social or economic barriers.

Blaming Others

The act of assigning responsibility for faults or wrongs to someone else.

Unfairly

In a manner that is not based on justice or equality; biased or prejudiced treatment.

Self-fulfilling Prophecy

A prediction that causes itself to become true due to the behavior it generates in believers.