Symonds Bendigo Division Purchases from an Outside Supplier for $52

question 18

Multiple Choice

Symonds Bendigo Division purchases from an outside supplier for $52 per unit. The company's Ballarat Division, which has no excess capacity, makes and sells the same part for external customers at a variable cost of $38 and a selling price of $58. If Ballarat commences sales to Bendigo it will (1) use the general rule and (2) be able to reduce the variable cost on internal transfers by $4. If external sales are not affected, Ballarat should establish a transfer price of:

• A) $34
• B) $38
• C) $54
• D) $58

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Definitions:

Sophisticated Technologies

Advanced and complex technological systems or devices that offer improved capabilities or performance.

Computer Technology

Computer technology encompasses the hardware and software components required for the processing, storage, and communication of digital information.

Skilled Employees

Workers who have acquired special abilities and knowledge through training or experience, enhancing their performance and productivity.

Production Rates

The speed at which goods are manufactured or services are provided in a specified period.