Division D Has Asked Division C of the Same Company

question 35

Multiple Choice

Division D has asked Division C of the same company to supply it with 4,000 units of part L763 this year to use in one of products. Division D has received a bid from an outside supplier for the parts at a price of £26.00 per unit. Division C has the capacity to produce 15,000 units of part L763 per year. Division C expects to sell 12,000 units of part L763 to outside customers this year at a price of £29.00 per unit. To fill the order from Division D, Division C would have to cut back its sales to outside customers. Division C produces part L763 at a variable cost of £20.00 per unit. The cost of packing and shipping the parts for outside customers is £1.00 per unit. These packing and shipping costs would not have to be incurred on sales of the parts to DivisionD.
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The minimum transfer price for Division C is

• A)£27
• B)£28
• C)£26
• D)£19

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Definitions:

Herman and Chomsky

Edward Herman and Noam Chomsky, authors of the "Manufacturing Consent" theory, which critiques the media's role in propagating elite interests.

Mass Media

Various platforms of communication that are capable of reaching a large audience, including television, newspapers, radio, and the internet, often used for disseminating information, entertainment, and advertising.

Face-To-Face Interaction

Direct, in-person communication between individuals, allowing for non-verbal cues and immediate feedback.

Functionalist Theories

Theories that view society as a complex system whose parts work together to promote solidarity and stability, emphasizing the interrelations of social institutions.