Division AA Does Not Have Excess Capacity to Produce Product

question 103

Multiple Choice

Division AA does not have excess capacity to produce Product XX.The division can sell Product XX for $10 per unit outside the company.Variable costs are $6 per unit.Division BB wants to purchase Product XX from Division AA to use in Product ZZ.The selling price of Product ZZ is $25 per unit and variable costs to finish the product after the transfer are $12 per unit.An outside supplier will sell Product XX for $12 per unit.What is the minimum transfer price for Division AA?

• A) $4 per unit
• B) $6 per unit
• C) $10 per unit
• D) $12 per unit

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Definitions:

Peripheral IV Line

A medical device inserted into a peripheral vein, typically in the arm, to administer fluids, medications, or for blood drawing.

Infiltrated

The act of surreptitiously entering or becoming a part of an organization or place with a deceitful purpose.

Antecubital Area

The inner surface of the arm in front of the elbow, commonly used as a site for drawing blood or administering injections.

Fluid Homeostasis

The maintenance of a stable internal environment for fluids in the body, including the regulation of volume, pressure, and composition.