Division X of Charter Corporation Makes and Sells a Single

question 10

Multiple Choice

Division X of Charter Corporation makes and sells a single product which is used by manufacturers of fork lift trucks. Presently it sells 12,000 units per year to outside customers at $24 per unit. The annual capacity is 20,000 units and the variable cost to make each unit is $16. Division Y of Charter Corporation would like to buy 10,000 units a year from Division X to use in its products. There would be no cost savings from transferring the units within the company rather than selling them on the outside market. What should be the lowest acceptable transfer price from the perspective of Division X?

• A) $24.00
• B) $21.40
• C) $17.60
• D) $16.00

---

Definitions:

Supply Chain Council

An organization that provides insights, frameworks, and best practices for improving supply chain management and operations.

Metric Classification

The process of categorizing metrics based on their attributes or purposes, such as performance metrics, financial metrics, or operational metrics.

Supply Chain Council

An organization focused on improving supply chain efficiency and effectiveness through the development and promotion of best practices and standards.

SCOR Model

A framework developed by the Supply Chain Council that describes the business activities associated with satisfying a customer's demand, which include plan, source, make, deliver, return, and enable.