The Variable Cost of Part X Is $50 Per Unit

question 17

Multiple Choice

The variable cost of Part X is $50 per unit and the full cost of the part is $80 per unit.The part is produced in Country Z and transferred to a plant in Country B.Country Z has a 10% income tax rate.Country B has a 50% income tax rate and an import duty equal to 10% of the price of the item.Part X can be transferred at full cost or variable cost.Assume Part X is transferred at full cost.By using full cost instead of variable cost for the transfer price,the net savings is ________.

• A) $3 per unit
• B) $6 per unit
• C) $9 per unit
• D) $15 per unit

---

Definitions:

Role Playing

A method of training or therapeutic intervention where individuals act out roles in a simulated situation, often used to develop skills or resolve conflicts.

Fundamental Attribution Error

A cognitive bias where people tend to overemphasize personal characteristics and underestimate situational factors in explaining others' behavior.

Automobile Accident

An unforeseen and unplanned event involving vehicles, which may result in damage or injury.

Recklessness

A disregard for or indifference to the risks of one's actions and their potential harm to oneself or others.