Martin Company Currently Manufactures All Component Parts Used in the Manufacture

question 56

Multiple Choice

Martin Company currently manufactures all component parts used in the manufacture of various hand tools.The Extruding Division produces a steel handle used in three different tools.The budget for these handles is 120,000 units with the following unit cost. $$\begin{array} { | l | r | } \hline \text { Direct material } & \$ .60 \\\hline \text { Direct labor } & .40 \\\hline \text { Variable overhead } & .10 \\\hline \text { Fixed overhead } & \underline{.20} \\\hline \text { Total unit cost } & \$ 1.30 \\\hline\end{array}$$ Polishing Division purchases 20,000 handles from the Extruding Division and completes the hand tools.An outside supplier,Venture Steel,has offered to supply 20,000 units of the handle to Polishing Division for $1.25 per unit.The Extruding Division currently has idle capacity that cannot be used.If Martin would like to develop a range of transfer prices,what would be the maximum transfer price that Polishing would be willing to pay?

• A) $1.00.
• B) $1.10.
• C) $1.25.
• D) $1.30.

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A concept or vision of a community or nation where living conditions, opportunities, and welfare are improved for all its members.

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Laws and rules designed to protect public welfare, including health, safety, and environmental quality.

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The set of laws and rules governing the operation and behaviors of companies within specific sectors to ensure fair competition and protect consumers.

Antitrust Regulation

Laws designed to promote competition and prevent monopolies by regulating corporate mergers and breaking up companies when necessary.