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

question 60

Multiple Choice

Use the information below to answer the following question(s) .The Burnaby Division of Columbia Ltd.produces and sells component parts.Its variable costs per unit are $80 for direct materials, $32 for direct labour and $18 for variable factory overhead.It currently can sell it components on the outside market at a price of $165/unit.Fixed overhead costs are $22 per unit based on a denominator volume of 180,000 units.
-The Surrey Division of Columbia Ltd.has approached the Burnaby Division and requested that it supply 25,000 units of the component at a transfer price of $150.The Burnaby Division will save $3 per unit of direct materials costs for the components manufactured for the Surrey Division.Assuming Burnaby Division has no idle capacity, what is the minimum transfer price the Burnaby Division should agree to accept?

• A)$165
• B)$150
• C)$162
• D)$130
• E)$127

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Definitions:

Specific Population

A specific population refers to a defined group of individuals who share one or more characteristics for the purposes of research or study.

Precise Statements

Clearly defined and unambiguous declarations that convey specific information accurately.

Cluster Sampling

An approach to sampling in which the entire population is split into various segments, with a random selection of these segments being picked for examination.

Stratified Random Sampling

A sampling method that divides the population into smaller groups, or strata, based on shared characteristics before randomly selecting participants from each stratum.