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

question 109

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:
$\begin{array} { l r } \text { Direct materials } & \$ 12 \\ \text { Direct labour } & \$ 4 \\ \text { Variable overhead } & \$ 1 \\ \text { Division fixed costs } & \$ 14 \end{array}$
-Which on the following is a benefit of using a market-based transfer price?

• A)Profits of the division receiving the products are sacrificed for the overall good of the corporation.
• B)Economic viability and profitability of each division can be evaluated individually.
• C)Profits of the transferring division are sacrificed for the overall good of the corporation.
• D)None of these answers are correct.

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Definitions:

Primary Emotions

Fundamental feelings inherent in humans, such as joy, sadness, anger, and fear, that are immediate responses to stimuli.

Stress Response

The body's way of reacting to a challenge or demand, involving various physical and psychological responses.

Sympathetic Nervous System

Part of the autonomic nervous system that prepares the body for physical activity by accelerating the heart rate, constricting blood vessels, and raising blood pressure, among other things.

Oxytocin

A hormone produced in the brain that plays significant roles in childbirth, breastfeeding, and emotional bonding.