Cambridge Products Manufactures and Sells Cat Toys and Cat Beds

question 9

Multiple Choice

Cambridge Products manufactures and sells cat toys and cat beds.The Bed Division incurs the following costs for the production of a single cat bed when 5,000 beds are produced each year.

The company sells cat beds to various pet stores for $26.00.The Toy Division is doing a promotion whereby each customer that purchases ten cat toys during the months of January,February,and March will receive a free cat bed.The Toy Division would like to purchase these beds from the Bed Division.
Assuming the Bed Division is at full capacity,what is the optimal transfer price?

• A)$ 26.00
• B)$13.50
• C)$16.00
• D)$18.00
• E)None of the answer choices is correct.

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Definitions:

Visual Images

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Occipital Lobe

The rearmost lobe in each cerebral hemisphere of the brain, responsible for processing visual information.

Sexual Arousal

The physiological and psychological state of being awakened to sexual desire, often accompanied by physiological changes such as increased blood flow to genital areas.

REM Sleep

A unique phase of sleep in mammals and birds, characterized by random rapid movement of the eyes, low muscle tone throughout the body, and the propensity of the sleeper to dream vividly.