Answer the Following Questions Using the Information Below:
Calculate the Division

question 46

Multiple Choice

Answer the following questions using the information below:
Calculate the Division operating profit for the Don's Cricket Bat Company which manufactures cricket bats.It has two divisions: the Bat Blade Division and the Assembly Division.The Bat Blade Division manufactures blades for the Assembly Division,which splices handles to the blades and sells the completed bats to retailers.The Bat Blade Division 'sells' blades to the Assembly Division.The market price for the Assembly Division to purchase a blade is $40.(Ignore changes in inventory. ) The fixed costs for the Bat Blade Division are assumed to be the same over the range of 20 000-50 000 units.The fixed costs for the Assembly Division are assumed to be $14 per bat at 50 000 units.
Costs per blade are:
$\begin{array}{ll}\text { Direct materials } & \$ 8 \\\text { Direct labour } & \$ 6 \\\text { Variable overhead } & \$ 4 \\\text { Division fixed costs } & \$ 2\end{array}$

Assembly's costs per completed bat are:
$\begin{array} { l r } \text { Direct materials } & \$ 12 \\ \text { Direct labour } & \$ 4 \\ \text { Variable overhead } & \$ 1 \\ \text { Division fixed costs } & \$ 14 \end{array}$
-The market-based transfer price per blade from the Bat Blade Division to the Assembly Division is:

• A)$20
• B)$32
• C)$40
• D)$52

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Definitions:

Consumer Debt

Debt that is incurred by an individual primarily for personal, family, or household purposes.

Bankruptcy Proceedings

The legal process through which individuals or entities unable to pay their debts can seek relief from some or all of their financial obligations.

Insolvent

The condition of being unable to pay debts as they fall due, or having liabilities that exceed assets.

Preferential Payment

A payment made to a creditor before bankruptcy that unfairly prioritizes that creditor over others, which can be reclaimed by the bankruptcy trustee.