Given the Following Data for Electrical Cord Division Assume That Electrical Cord Division Is Selling All It Can

question 98

Multiple Choice

Given the following data for Electrical Cord Division:
$$\begin{array} { | l | r | } \hline \text { Selling price to outside customers } & \$ 40 \\\hline \text { Variable cost per unit } & 30 \\\hline \text { Fixed cost- Total } & 10,000 \\\hline \text { Capacity (in units) } & 2,000 \\\hline\end{array}$$ Assume that Electrical Cord Division is selling all it can produce to outside customers.If it sells to the Appliance Division,$1 can be avoided in variable cost per unit.The Appliance Division is presently purchasing from an outside supplier at $38 per unit.From the point of view of the company as a whole,any sales to the Appliance Division should be priced at:

• A) $40.
• B) $39.
• C) $38.
• D) The company would not want the transfer to take place.

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Definitions:

Crop-Lien System

A credit system used in the Southern United States after the Civil War, where farmers borrowed against future crop yields, leading to debt and economic dependency.

Natural-Resource Frontier

Areas yet to be explored or developed that are rich in natural resources, such as minerals, forests, and water bodies, offering potential for economic development.

Extraction Rights

Legal permissions granted to companies or individuals to extract natural resources such as minerals, oil, or gas from the land.

Federal Government

The national government of a federal country, where powers are divided between the central government and the states or provinces.