Division a Produces a Part with the Following Characteristics

question 10

Multiple Choice

Division A produces a part with the following characteristics: Division B, another division in the company, would like to buy this part from Division A. Division B is presently purchasing the part from an outside source at $28 per unit. If Division A sells to Division B, $1 in variable costs can be avoided.
-Suppose Division A is currently operating at capacity and can sell all of the units it produces on the outside market for its usual selling price.From the point of view of Division A,any sales to Division B should be priced no lower than:

• A)$27
• B)$29
• C)$20
• D)$28

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Definitions:

Co-optation

A strategy by which a group incorporates individuals from another, often oppositional group, to reduce threats or to gain their perspectives, sometimes diluting the original group's goals.

Coercion

The practice of forcing another party to act in an involuntary manner by use of threats, intimidation, or some other form of pressure or force.

Negotiation

The process by which parties with differing interests and objectives discuss an issue in an attempt to reach a mutually acceptable agreement.

Labor Unions

Organizations that represent the collective interests of workers in negotiations with employers over wages, benefits, and working conditions.