Fruities Ltd Has Two Divisions, Durian Division and Juice Division

question 13

Multiple Choice

Fruities Ltd has two divisions, Durian Division and Juice Division. Durian Division has an annual capacity of 10 000 units of durian juice concentrate. Juice Division's annual requirement of durian juice concentrate is 8000 units. Fruities Ltd requires that divisions should purchase inputs internally where available, and uses a cost-plus transfer price policy, where transfer price is set at variable cost plus 25 per cent. Therefore, Durian Division always satisfies the demand of the Juice Division first, before selling the remaining durian concentrate to external suppliers at the market price of $10 per unit. The variable cost of one unit of durian juice concentrate at Durian Division is $6. The external demand for Durian Division's durian juice concentrate is 2000 units.
What is the difference in the overall profit of Fruities Ltd under the cost-plus transfer price policy and a market-price transfer price policy?

• A) Fruities Ltd's profit is $20 000 lower under the cost-plus transfer pricing approach.
• B) Fruities Ltd's profit is $20 000 higher under the cost-plus transfer pricing approach.
• C) Fruities Ltd's profit is $25 000 higher under the cost-plus transfer pricing approach.
• D) There is no difference under the two policies.

Identify the circumstances under which a therapist has a duty to warn or prevent crime based on client communications.

Recognize the criteria and implications of the insanity defense in criminal trials based on the M'Naghten rule.

Understand the impact and requirements of the Tarasoff case regarding therapist's responsibility to warn potential victims.

Grasp the criteria and considerations for involuntary commitment of mentally ill individuals.

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Definitions:

Organizational Structure

The way in which a company or organization is arranged, including the divisions, roles, and responsibilities to ensure its operations.

Marketing ROI

Return on Investment in marketing; a measure of the profitability and effectiveness of marketing efforts, comparing the gain from these activities to their cost.

Return on Investment

A financial metric used to evaluate the efficiency of an investment, calculated by dividing the profit from an investment by its cost.

Marginal Analysis

An assessment method used to examine the benefits and costs of an extra unit of consumption or production.