(Appendix 12A)Division 1 of Ace Company Makes and Sells Wheels

question 14

Multiple Choice

(Appendix 12A) Division 1 of Ace Company makes and sells wheels that can either be sold to outside customers or transferred to Division 2.The following data are available from last month: Division 1: Division 2: If Division 1 sells the wheels to Division 2, Division 1 can avoid $2 per unit in sales commissions.
Suppose that Division 1 sells 11, 500 units each month to outside customers.According to the formula in the text, what is the lowest acceptable transfer price from the viewpoint of the selling division?

• A)$47.00 per unit
• B)$43.50 per unit
• C)$37.50 per unit
• D)$34.73 per unit

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Definitions:

Lateral Geniculate

A part of the thalamus that acts as a primary processing center for visual information received from the retina.

Dentate Gyrus

A part of the hippocampus involved in memory formation, thought to contribute to the generation of new memories.

Internal Carotid Arteries

Major arteries located on either side of the neck that supply blood to the brain, eyes, and parts of the face and scalp.

Vertebral Arteries

Pair of arteries that arise from the subclavian arteries and ascend in the neck to supply blood to the brain and spinal cord.