(Appendix 12A)Division X Makes a Part That It Sells to Customers

question 8

Multiple Choice

(Appendix 12A) Division X makes a part that it sells to customers outside of the company.Data concerning this part appear below: Division Y of the same company would like to use the part manufactured by Division X in one of its products.Division Y currently purchases a similar part made by an outside company for $70 per unit and would substitute the part made by Division X.Division Y requires 5, 000 units of the part each period.Division X can already sell all of the units it can produce on the outside market.What should be the lowest acceptable transfer price from the perspective of Division X?

• A)$75
• B)$66
• C)$16
• D)$50

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Definitions:

Habituation Method

A research technique used in cognitive psychology to study the response patterns to stimuli, based on the principle that familiarity leads to a decrease in response.

Recognition

The identification of something or someone as having been previously seen, heard, or known; in psychology, it refers to recalling information from memory.

Visual Preferences

Visual preferences relate to an individual's tendency to favor certain visual stimuli over others, which can influence attention, learning, and emotional responses from infancy through adulthood.

Language Development

Describes the method through which young children learn to comprehend and express language in their early years.