Use the Information Below to Answer the Following Question(s)

question 172

Multiple Choice

Use the information below to answer the following question(s) .Soft Cushion Company is highly decentralized.Each division is empowered to make its own sales decisions.The Assembly Division can purchase cushion stuffing from the Production Division or from external suppliers.The Production Division has been the major supplier of stuffing in recent years.The Assembly Division has announced that two external suppliers will be used to purchase the stuffing at $20 per kilogram for the next year.The Production Division recently increased its unit price to $40.The manager of the Production Division presented the following information; variable cost $32, fixed cost $8, to top management in order to attempt to force the Assembly Division to purchase the stuffing internally.The Assembly Division purchases 20,000 kg per month.
-The general guideline for determining the minimum transfer price is

• A)cover all employee costs incurred in production.
• B)fixed cost plus opportunity costs per unit to the vendor division.
• C)variable cost plus opportunity costs per unit to the vendor division.
• D)fixed cost plus incremental costs per unit up to the point of transfer.
• E)additional incremental costs per unit up to the point of transfer, plus opportunity costs per unit to the vendor division.

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Definitions:

Factor XII

A clotting factor also known as Hageman factor, involved in the initiation of the coagulation cascade in blood clotting.

Osmotic Pressure

The pressure required to prevent the flow of a solvent into a solution through a semipermeable membrane, reflecting the concentration of solutes.

Erythrocytes

Red blood cells that carry oxygen from the lungs to the body tissues and carbon dioxide as a waste product, back to the lungs.

Antibodies

Y-shaped proteins produced by the immune system that identify and neutralize foreign objects like bacteria and viruses.