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Parkside Inc

question 27

Multiple Choice

Parkside Inc.has several divisions that operate as decentralized profit centers.Parkside's Entertainment Division manufactures video arcade equipment using the products of two of Parkside's other divisions.The Plastics Division manufactures plastic components,one type that is made exclusively for the Entertainment Division,while other less complex components are sold to outside markets.The products of the Video Cards Division are sold in a competitive market;however,one video card model is also used by the Entertainment Division.The actual costs per unit used by the Entertainment Division follow: (CMA adapted) The Plastics Division sells its commercial products at full cost plus a 25% markup and believes the proprietary plastic component made for the Entertainment Division would sell for $6.25 per unit on the open market.The market price of the video card used by the Entertainment Division is $10.98 per unit.Assume that the Entertainment Division is able to purchase a large quantity of video cards from an outside source at $8.70 per unit.The Video Cards Division,having excess capacity,agrees to lower its transfer price to $8.70 per unit.This action would:

Definitions:

Accuracy

The degree to which the result of a measurement, calculation, or specification conforms to the correct value or a standard.

Facial Expressions

Physical manifestations of emotions and feelings through movements and positions of the muscles in the face.

Emotions

Complex psychophysiological experiences reflected in psychological states, behavioral responses, and physiological changes.

Introvert

A person who prefers solitary activities and focuses on their own thoughts and feelings rather than seeking external stimulation.