Fruities Ltd Has Two Divisions, Durian Division and Juice Division

question 5

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. The variable production cost of one unit of durian juice concentrate at Durian Division is $6, but the division incurs $1 additional shipping cost per unit when selling to external suppliers. The market price for the division's durian juice concentrate is $10 per unit, and currently, the external demand for Durian Division's durian juice concentrate is 5000 units.
Using the transfer pricing formula, Durian Division should charge the Juice Division:

• A) $6.00.
• B) $7.13.
• C) $9.00.
• D) $10.00.

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Definitions:

I/O System

An Input/Output System is the component of a computer or PLC responsible for communication with the external environment through devices like sensors and actuators.

CPU

A CPU, or Central Processing Unit, is the primary component of a computer responsible for interpreting and executing instructions and running software.

Field Equipment

Hardware and devices deployed in outdoor or remote areas for monitoring, controlling, or communication purposes in various industries.

PLC's Operating System

The software framework that manages the hardware resources of a Programmable Logic Controller and provides the execution environment for the control program.