An Appropriate Transfer Price Between Two Divisions of the Fathom

question 1

Multiple Choice

An appropriate transfer price between two divisions of The Fathom Company can be determined from the following data: (CIA adapted)
$$\begin{array} { | l | r | } \hline \text { Fabricating Division } & \\\hline \text { Market price of } & \$ 50 \\\text { subassembly } & \$ 20 \\\hline \text { Variable cost of } \\\text { subassembly } & 1,000 \\\hline \text { Excess capacity (in units) } & \\\hline \text { Assembling Division } & 900 \\\hline \text { Number of units needed } & \$ \\\hline\end{array}$$ What is the natural bargaining range for the two divisions?

• A) Between $20 and $50.
• B) Between $50 and $70.
• C) Any amount less than $50.
• D) $50 is the only acceptable transfer price.

Recognize different research methods and their appropriateness to specific research questions.

Understand the significance and calculation of liquidity ratios and their implications on a firm's inventory management.

Comprehend the function and importance of market value ratios in evaluating a firm's past performance and future prospects.

Grasp the variability and impact of financial ratios in analyzing a firm's asset utilization and financial leverage.

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Definitions:

Pretreatment Stage

The initial phase in therapy where assessment and evaluation of the client's needs and goals are conducted.

Stages-Of-Change

A model in psychology that maps out the phases individuals undergo when changing behavior, including precontemplation, contemplation, preparation, action, and maintenance.

Premature Termination

The ending of a therapeutic relationship or treatment process before the completion of the planned course of therapy, often resulting in unresolved issues for the client.

Clinical Symptoms

Observable signs and subjective experiences indicating the presence of a disease or psychological disorder.