(Appendix 12A)The North Division of Barter Company Makes and Sells

question 16

Multiple Choice

(Appendix 12A) The North Division of Barter Company makes and sells a single product, which is a part used in manufacturing trucks.The annual production capacity is 35, 000 units and the variable cost of each unit is $24.Presently the North Division sells 32, 000 units per year to outside customers at $40 per unit.The South Division of Barter Company would like to buy 15, 000 units a year from North to use in its production.There would be no savings in variable costs from transferring the units internally rather than selling them externally.The lowest acceptable transfer price from the standpoint of the North Division should be closest to:

• A)$36.80
• B)$24.00
• C)$32.00
• D)$40.00

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Definitions:

Bank of the United States

A central banking system created in the late 18th and early 19th centuries to handle the financial needs and requirements of the growing United States government.

Protective Tariffs

Taxes imposed on imported goods to protect domestic industries from foreign competition by making imported goods more expensive.

Excise Tax

A tax on specific goods or activities, often included in the price of products like alcohol, tobacco, and gasoline, used by governments to raise revenue.