Figure 2 Klaehn Industries Is a Decentralized Company That Evaluates Its Divisions

question 4

Multiple Choice

Figure 2
Klaehn Industries is a decentralized company that evaluates its divisions based on ROI. The Fahl Division has the capacity to make 1,000 units of a component. The Fahl Division's variable costs are £40 per unit.
The Melton Division can use the component in one of its products. The Melton Division would incur £50 of variable costs to convert the component into its own product that sells for £160.
-Refer to Figure 2. Assume the Fahl Division can sell 800 units at £120 each. Any excess capacity will be unused unless the units are purchased by the Melton Division, which could use up to 100 units. The minimum transfer price that the Fahl Division would be willing to accept would be

• A) £120
• B) £110
• C) £100
• D) £40

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Definitions:

Genetic Differences

are variations in the DNA sequences among individuals, which contribute to the diversity in physical traits and susceptibilities to certain diseases.

Environmental Influences

External factors, such as climate, geography, pollutants, and social conditions, that can affect individuals' behavior, development, and health.

Brym and Lie

Sociologists known for their contributions to understanding social structures, processes, and changes within societies.

Analyze

To examine something methodically and in detail, typically for purposes of explanation and interpretation.