Branded Shoe Company Manufactures Only One Type of Shoe and Has

question 57

Multiple Choice

Branded Shoe Company manufactures only one type of shoe and has two divisions,the Stitching Division and the Polishing Division.The Stitching Division manufactures shoes for the Polishing Division,which completes the shoes and sells them to retailers.The Stitching Division "sells" shoes to the Polishing Division.The market price for the Polishing Division to purchase a pair of shoes is $48.(Ignore changes in inventory. ) The fixed costs for the Stitching Division are assumed to be the same over the range of 40,000-101,000 units.The fixed costs for the Polishing Division are assumed to be $17 per pair at 101,000 units.


What is the market-based transfer price per pair of shoes from the Stitching Division to the Polishing Division?

• A)$23
• B)$36
• C)$48
• D)$59

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Definitions:

Tenancy in Common

A form of co-ownership where each party owns a separate fraction of the property and can transfer their interest independently.

Joint Tenancy

Joint ownership of property by two or more co-owners in which each co-owner owns an undivided portion of the property. On the death of one of the joint tenants, his or her interest automatically passes to the surviving joint tenant(s).

Ownership Interests

The rights and stake a person or entity has in property, including the rights to use, sell, or lease it.

Real Property

Land and anything permanently attached to it, such as buildings, in contrast to personal property, which is movable.