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

question 30

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 above. 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 maximum transfer price that the Melton Division would be willing to pay would be

• A) £120
• B) £110
• C) £100
• D) £60

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Definitions:

Deacons of Defense

An African American civil rights organization founded in the 1960s to protect civil rights activists from intimidation and violence, often by using armed self-defense.

Nonviolent Civil Rights

A strategy used during the civil rights movement, advocating for racial justice through peaceful means, such as marches, sit-ins, and boycotts.

Armed Defense

The use of weapons in protection against attackers or aggressors; in historical context, it can refer to practices by individuals or communities to safeguard their rights and safety.

Muhammad Ali

An American professional boxer, activist, and cultural icon known for his skills in the ring, outspoken stance on civil rights, and conversion to Islam.