Division a of Harkin Company Has the Capacity for Making

question 13

Multiple Choice

Division A of Harkin Company has the capacity for making 3,000 motors per month and regularly sells 1,950 motors each month to outside customers at a contribution margin of $62 per motor. The variable cost per motor is $35.70. Division B of Harkin Company would like to obtain 1,400 motors each month from Division A. What should be the lowest acceptable transfer price from the perspective of Division A?

• A) $26.57
• B) $51.20
• C) $35.70
• D) $62.00

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Definitions:

Retailer

A business or individual that sells goods directly to consumers, acting as the final link in the supply chain between manufacturers and consumers.

Customers

Individuals or entities that purchase goods or services from a company.

Government

The organization or system through which a society or community is governed, often responsible for making and enforcing laws, and providing services to its citizens.

Accrued Interest

The interest that has accumulated on a bond, loan, or other financial instrument but has not yet been paid to the lender or investor.