Barrister Company Has Two Divisions: a and Z

question 29

Multiple Choice

Barrister Company has two divisions: A and Z. The A Division produces a single product that can be sold to outside customers or to the Z Division. Sales forecasts, production statistics and costs for both divisions for 2014 are shown below:
A Division:
Z Division:
* When A Division sells to Z Division, no variable selling costs are incurred by A Division.
Calculate the minimum per unit transfer price that A Division should charge Z Division in 2014, using the general transfer-pricing formula.

• A) $6.00
• B) $8.50
• C) $7.26
• D) None of the given answers

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Definitions:

Variable

An element, feature, or factor that is liable to vary or change.

Characteristic

A feature or quality belonging typically to a person, place, or thing and serving to identify it.

Categorical Variables

Variables that represent types or categories that can be named or labeled without implying any numerical order.

Cases

Instances or occurrences of a particular condition or category being studied in research or documented in various fields such as law or medicine.