The Engine Division of Magnificent Motor Corporation uses 5,000 carburetors per month in its production of automotive engines. It presently buys all of the carburetors it needs from two outside suppliers at an average cost of $100 . The Carburetor Division of Magnificent Motor Corporation manufactures the exact type of carburetor that the Engine Division requires. The Carburetor Division is
presently operating at its capacity of 15,000 units per month and sells all of its output to a foreign car manufacturer at $106 per unit. Its cost structure (on 15,000 units) is: Variable production costs $70 Variable selling costs 10 All fixed costs 10 Assume that the Carburetor Division would not incur any variable selling costs on units that are transferred internally. Refer to Magnificent Motor Corporation. What is the maximum of the transfer price range for a transfer between the two divisions?
a. $106
b. $100
c. $90
d. $70
B
$100 represents the price at which the good could be obtained externally.
You might also like to view...
Entering foreign markets is an example of a:
A) product development strategy. B) market penetration strategy. C) market development strategy. D) market modification strategy.
Activity-based costing is an example of:
A. Enterprise System. B. Information overload. C. Mandatory information. D. Discretionary information.
Business culture affects ethical behavior in competition. Briefly discuss the two most common kinds of unethical competitive behavior. In answering, provide concrete examples for both.
What will be an ideal response?
The GE "stoplight" evaluation method is a very objective approach because GE feels there are too many possible errors if it tries to use subjective criteria for judging "attractiveness" or "strength."
Answer the following statement true (T) or false (F)