Crush Company Makes Internal Transfers at 160% of Full Cost

question 64

Multiple Choice

Crush Company makes internal transfers at 160% of full cost.The Soda Refining Division purchases 40,000 containers of carbonated water per day,on average,from a local supplier,who delivers the water for $40 per container via an external shipper.To reduce costs,the company located an independent supplier in Illinois who is willing to sell 40,000 containers at $30 each,delivered to Crush Company's Shipping Division in Missouri.The company's Shipping Division in Missouri has excess capacity and can ship the 40,000 containers at a variable cost of $4.50 per container.What is the total cost of purchasing the water from the Illinois supplier and shipping it to the Soda Division?

• A) $1,200,000
• B) $1,380,000
• C) $1,600,000
• D) $180,000

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Definitions:

Cognitive Dissonance

The mental discomfort experienced by an individual who holds two or more contradictory beliefs, values, or ideas at the same time.

Attitude Change

The process in which an individual's feelings, beliefs, or behavioral intentions toward an object, person, or situation are modified.

Persuasive Message

A message intended to change the attitudes, beliefs, or behaviors of the receiver through argumentation or appeal.

Attention

The act of concentrating on a specific stimulus while ignoring other irrelevant information.