You Have Been Provided with the Following Information for Division

question 72

Multiple Choice

You have been provided with the following information for Division X of a decentralized company:
$$\begin{array} { | l | r | } \hline \text { Selling price } & \$ 90 \\\hline \text { Variable cost per unit } & 66 \\\hline \text { Fixed costper unit } & 20 \\\hline \text { Sales volume (units) } & 22,500 \\\hline \text { Capacity (units) } & 26,000 \\\hline\end{array}$$ Division Y of the same company would like to purchase all of its units internally.Division Y needs 6,000 units each period and currently pays $84 per unit to an outside firm.What is the lowest price that Division X could accept from Division Y? (Assume that Division Y wants to use a sole supplier and will not purchase less than 6,000 from a supplier. )

• A) $90.
• B) $84.
• C) $80.
• D) $66.

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Definitions:

Biconditional

A logical statement where both parts imply each other; often phrased as "if and only if."

Component

A constituent part or element of a larger whole.

Contradictory

Referring to statements or propositions that directly oppose each other such that if one is true, the other must be false.

Truth Values

The valuation in logic assigned to propositions, indicating their truthfulness as either true (T) or false (F).