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

question 177

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 seller of product A has idle capacity and has no alternative use for the excess capacity.The seller can sell each unit at $10.Outlay cost is $2.What is the opportunity cost of selling internally?

• A)$0
• B)$8
• C)$10
• D)$12
• E)$16

---

Definitions:

Mental Processes

The internal, covert activities of the mind, such as thinking, feeling, and reasoning.

Ethology

The study of behaviors that are specific to a species.

Psychosexual Development

The process by which libidinal energy is expressed through different erogenous zones during different stages of development.

Species-Specific Behaviors

Actions or reactions that are characteristic to a particular species, often innate and crucial for survival, such as mating rituals or territorial defense.