Holmes,Inc

question 64

Multiple Choice

Holmes,Inc.has a division that manufactures a component that sells for $165 and has a variable cost of $45.Another division of the company wants to purchase the component.Fixed cost per unit of the component is $24.What is the transfer price if the division is operating at full capacity?

• A) $69
• B) $189
• C) $165
• D) $24

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Definitions:

Sale of Goods

A transaction between a buyer and a seller involving the transfer of ownership of goods from one party to another for a price.

Secondary Obligation

A duty or liability that is dependent on the occurrence or non-occurrence of certain conditions or the failure to perform a primary obligation.

Promissory Estoppel

A legal principle that prevents a party from withdrawing a promise if the other party has significantly relied on that promise to their detriment, even if there is no formal contract.

Statute Of Frauds

A legal principle that requires certain types of contracts to be in writing and signed by the parties involved to be enforceable.