Signature Scents Has Two Divisions: the Cologne Division and the Bottle

question 26

Multiple Choice

Signature Scents has two divisions: the Cologne Division and the Bottle Division. The Bottle Division produces containers that can be used by the Cologne Division. The Bottle Division's variable manufacturing cost is $2, shipping cost is $0.10, and the external sales price is $3. No shipping costs are incurred on sales to the Cologne Division, and the Cologne Division can purchase similar containers in the external market for $2.60.
The maximum amount the Cologne Division would be willing to pay for each bottle transferred would be:

• A) $2.00.
• B) $2.10.
• C) $2.60.
• D) $2.90.
• E) $3.00.

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Definitions:

Distinct

Clearly different or set apart from something.

Dangerous

Involving potential harm or risk to safety, security, or health.

Retribution

A principle of justice that suggests punishment should be proportionate to the crime committed as a form of moral vengeance.

Criminal Punishment

The legal process by which an individual who has been found guilty of a crime is subjected to a penalty imposed under the law.