Materials Used by Jefferson Company in Producing Division C's Product

question 78

Multiple Choice

Materials used by Jefferson Company in producing Division C's product are currently purchased from outside suppliers at a cost of $10 per unit. However, the same materials are available from Division A. Division A has unused capacity and can produce the materials needed by Division C at a variable cost of $8.50 per unit. A transfer price of $9.50 per unit is negotiated and 25,000 units of material are transferred, with no reduction in Division A's current sales.
How much would Division C's income from operations increase?

• A) $0
• B) $75,000
• C) $12,500
• D) $50,000

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Definitions:

Equilibrium Potential

This term refers to the electrical potential difference that precisely balances an ionic concentration gradient across a membrane, resulting in no net ion flow.

Hyperpolarization

An increase in a cell's membrane potential, making it more negative inside compared to the outside and further from the threshold that causes action potentials.

Absolute Refractory Period

A period immediately following the stimulation during which a nerve or muscle is unresponsive to further stimulation.

Second Messenger System

A method of cellular signaling where the signal from a first messenger is transferred to a secondary molecule inside the cell to elicit a physiological change.