Bounous Company Has Two Divisions, Division X and Division Y

question 38

Multiple Choice

Bounous Company has two divisions, Division X and Division Y. Division X has a production capacity of 6,000 units of a particular part per month. Division X sells 4,600 units of the part each month to outside customers at a contribution margin of £36 per unit. Division Y would like to buy 2,000 units of the part each month from Division X. In computing the lowest acceptable transfer price from the perspective of the selling division, the lost contribution margin per unit portion of the transfer price computation would be

• A)£10.80
• B)£36.00
• C)£5.40
• D)£25.20

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Definitions:

Meatless Diet

A diet that excludes all types of meat, including beef, poultry, and fish, often adopted for health, ethical, or environmental reasons.

Animal Products

Items derived from parts of animals, such as meat, dairy, and wool, used for food, clothing, or other purposes.

Health Benefits

Refers to the positive effects or advantages on physical and mental well-being that come from a particular activity, policy, or product.

World Hunger

The global issue of insufficient food supply and malnutrition affecting millions worldwide, especially in developing countries.