Answer the Following Questions Using the Information Below

question 102

Multiple Choice

Answer the following questions using the information below:
Greenlawn Corporation has two divisions, Distribution and Production. The company's primary product is fertilizer. Each division's costs are provided below:
The Distribution Division has been operating at a capacity of 4,000,000 pounds a week and usually purchases 2,000,000 pounds from the Production Division and 2,000,000 pounds from other suppliers at $0.90 per pound.
-Assume 100,000 pounds are transferred from the Production Division to the Distribution Division for a transfer price of $0.80 per pound. The Distribution Division sells the 100,000 pounds at a price of $1.10 each to customers. What is the operating income of both divisions together?

• A)$20,000
• B)$30,000
• C)$40,000
• D)$50,000

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Definitions:

Rational Exchange

An interaction or transaction based on a calculated decision-making process, where individuals seek to maximize benefits while minimizing costs.

Social Interaction

The process by which individuals act and react in relation to others, involving communication, shared norms, and behaviors within a society.

Put Down Jokes

Humorous remarks intended to mock, insult, or belittle someone, often used as a form of social interaction or criticism.

Group Norms

Shared guidelines or expectations on behavior within a group, dictating how members should act.