The Machining Division Has a Capacity of 2,000 Units

question 99

Multiple Choice

The Machining Division has a capacity of 2,000 units. Its sales and cost data are: Selling price per unit $100
Variable manufacturing costs per unit $25
Variable administrative costs per unit $5
Total fixed manufacturing overhead $20,000
Total fixed administrative costs $5,000
The Machining Division is currently selling 1,900 units to outside customers, and the Assembly Division wants to purchase 300 units from Machining. If the transaction takes place, the variable administrative costs per unit on the units transferred to Assembly will be $2/unit, not $5/unit. What should be the transfer price?

• A)$73.67
• B)$76.67
• C)$97.00
• D)$100.00

---

Definitions:

Tip-of-the-Tongue

A temporary state of being unable to recall a word or name, while feeling that retrieval is imminent.

Tip-of-the-Tongue Effect

A cognitive phenomenon where a person feels certain they know something (like a word or a name) but can't retrieve it from memory at the moment.

Encoding Specificity

The hypothesis that when information is stored in memory, it is not recorded in its original form but translated (“encoded”) into a form that includes the thoughts and understanding of the learner.

Levels of Processing

A theory suggesting that the depth (shallow to deep) of mental processing affects memory recall, with deeper levels of processing leading to more durable memory traces.