The Red River Division of Alto Company Produces and Sells

question 57

Multiple Choice

The Red River Division of Alto Company produces and sells bags of pottery clay that can either be sold to outside customers or transferred to the White Mountain Division of Alto Company. The following data are available from the last year:
By selling to the White Mountain Division, the Red River Division will avoid £3 per bag in selling costs.
-If Red River can sell only 10,000 bags annually 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)£20
• B)£16
• C)£11
• D)£14

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Definitions:

New Harmony

Community founded in Indiana by British industrialist Robert Owen in 1825; the short-lived New Harmony Community of Equality was one of the few nineteenth-century communal experiments not based on religious ideology.

Common Good

A concept suggesting that certain goods, beneficial outcomes, or policies are universally advantageous to all members of a community or society.

Education Goal

The pursuit of imparting knowledge, developing critical thinking, fostering intellectual growth, and preparing individuals for societal contribution and personal fulfillment.

Shaker Communities

Religious groups known for their simple living, architecture, and furniture, as well as practices like celibacy and communal living, originating in the 18th century in England and America.