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:

Social Risk

The fears that consumers suffer when they worry others might not regard their purchases positively.

Performance Risk

Involves the perceived danger inherent in a poorly performing product or service.

Internal Locus of Control

The belief that one's own actions and behaviors are major determinants of life events and outcomes, rather than external forces or chance.

External Locus of Control

The belief that one's successes or failures result from external forces beyond personal control.