Division Alpha Can Purchase a Required Part from an Outside

question 66

Multiple Choice

Division Alpha can purchase a required part from an outside supplier for $35.
-Division Beta wants to supply the part at a transfer price of $38.50,which is above its incremental costs.Division Alpha's manager should

• A)pay the $38.50 price to Division Beta.
• B)tell his immediate supervisor that Division Beta is being unreasonable.
• C)negotiate an appropriate transfer price with the manager of Division Beta.
• D)buy from the outside supplier.

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Definitions:

Financial Data

Numerical data detailing a company's financial status, operations, and liquidity, utilized for evaluation and decision-making purposes.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of the company.

Financial Data

Numeric information related to financial aspects of a business, including income, expenses, assets, and liabilities.

Sales On Account

Transactions where goods or services are provided to a customer with an agreement to pay later.