Figure 4 the Simonds Division Produces a Component That Is Used by Used

question 36

Multiple Choice

Figure 4
The Simonds Division produces a component that is used by the Allen Division. The cost of manufacturing the component is as follows:
^aBased on a practical volume of 400,000 components
Other costs incurred by the Simonds Division are as follows:
The component usually sells for £35 in the external market. The Simonds Division is capable of producing 500,000 components per year; however, only 400,000 components are expected to be sold next year. The variable selling expenses are avoidable if the component is sold internally.
The Allen Division has been buying the same component from an external supplier for £34 each. The Allen Division expects to use 50,000 units of the component next year. The manager of the Allen Division has offered to buy 50,000 units from the Simonds Division for £22.50 each.
-Refer to Figure 4. The maximum transfer price that the Allen Division would be willing to pay is

• A) £20.00
• B) £25.00
• C) £26.50
• D) £34.00

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Definitions:

Memory Consolidation

The biological process through which memories are transformed from a transient and fragile status to a more permanent and robust state; according to most researchers, consolidation occurs over the course of several hours.

Primacy Effect

In free recall, the tendency to recall the first items on the list more readily than those in the middle.

Recency Effect

is the tendency to remember the most recently presented information best.

Personally Relevant

Pertaining directly to or having a direct impact on an individual's personal life, interests, or situations.