A company has two divisions, A and B; each are operated as a profit center. A charges B $35 per unit for each unit transferred to B. Other data follow: A's variable cost per unit $30 A's fixed costs $10,000 A's annual sales to B 5,000 units A's annual sales to outsiders 50,000 units A is planning to raise its transfer price to $50 per unit. Division B can purchase units at $40 each from
outsiders, but doing so would idle A's facilities now committed to producing units for B. Division A cannot increase its sales to outsiders. From the perspective of the company as a whole, from whom should Division B acquire the units, assuming B's market is unaffected?
a. outside vendors
b. Division A, but only at the variable cost per unit
c. Division A, but only until fixed costs are covered, then should purchase from outside vendors
d. Division A, in spite of the increased transfer price
D
Since Division A cannot increase its sales to outsiders, it would not be producing the units sold to Division B. Additionally, Division B would be spending an additional $10 per unit from an outside source; this would reduce external profits.
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Which of the following customer questions is answered by a company's value proposition?
A) "Why should I buy your brand rather than a competitor's?" B) "What is your company's estimated customer equity?" C) "What are the costs involved in the production of your brand?" D) "What is the budget allocated by your company for research and development?" E) "What is the financial stability of your company?"
Companies that adopt value-added pricing ________
A) consider value-added features as a fitting substitute for aggressive cost cutting B) set incredibly low prices to meet competition C) attach value-added features and services to differentiate their offers and support their higher prices D) overprice their products without any apparent justification E) underprice their products and lower quality to boost demand in the short-run
Which of the following is the most preferred option to be used whenever it is impossible, cost prohibitive, or impractical to use any other approach for problem solving?
a. prototype building b. field study c. market research d. simulation
Use the information below to determine the sales revenue, cost of goods sold and gross profit that would be reported for the company related to the March 16 sale assuming the company uses weighted average inventory valuation and a perpetual inventory system.January 1:Purchased 100 units at $10 per unit.February 5:Purchased 60 units at $12 per unit.March 16:Sold 40 units for $16 per unit.
What will be an ideal response?