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 minimum of the transfer price range for a transfer between the two divisions?
a. $96
b. $90
c. $70
d. $106
A
$96 represents the external sales price less the selling expenses that will not be incurred.
You might also like to view...
What is the goal of evaluating the organization, style and tone of a message?
A) To improve readability B) To produce efficient writing that is easy to skim C) To make sure content is clear, logical and reader oriented D) To make sure there is a variety of sentence lengths E) To make sure your credibility is not affected by errors
Answer the following statements true (T) or false (F)
1. Cancellation is a stage of a project’s life cycle. 2. Government regulations and guidelines influencing the project is a detail usually included in a project’s statement of work. 3. The work package is part of the work breakdown structure. 4. One of the questions a company is likely to ask in assessing project risk is who will be held responsible in case of project failure.
Understanding the real needs of two people and then looking for creative solutions that allow both parties to have their needs met is an example of which of the following?
a. Tough battler b. Problem solver c. Compromiser d. Friendly helper e. Avoider
How can an organization's presence be most clearly established at an MPR event?
A) giving discounts for products to event participants B) sending invitations to connectors to attend the event C) selecting an event related to the firm's overall mission D) placing signs and advertisements at the event E) providing free samples to connectors and participants