Division A makes a part that it sells to customers outside of the company. Data concerning this part appear below: Selling price to outside customers$40 Variable cost per unit$30 Total fixed costs$10,000 Capacity in units 20,000 Division B of the same company would like to use the part manufactured by Division A in one of its products. Division B currently purchases a similar part made by an outside company for $38 per unit and would substitute the part made by Division A. Division B requires 5,000 units of the part each period. Division A has ample capacity to produce the units for Division B without any increase in fixed costs and without cutting into sales to outside customers. If Division A sells to Division B rather than to outside customers, the variable cost be unit
would be $1 lower. What is the lowest acceptable transfer price Division A should accept?
A. $10
B. $40
C. $30
D. $38
E. $29
Answer: E
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Answer the following statement true (T) or false (F)
Codes of conduct are also frequently known as
A. codes of values. B. codes of ethics. C. corporate culture. D. ethics compliance programs. E. moral codes.
Which of the following statements is true of fixed and variable costs?
A) Both costs are constant when considered on a total basis. B) Variable costs are constant in total, and fixed costs are constant per unit. C) Both costs are constant when considered on a per unit basis. D) Fixed costs are constant in total, and variable costs are constant per unit.
Assume an offeree mails a rejection to the offeror on November 1 . This rejection arrives at the offeror's place of business on November 5 . In the meantime, on November 4, the offeree sends the offeror an acceptance that arrives November 6 . Which of the following statements correctly describes the situation?
a. There was no contract. b. There was a contract since the acceptance was mailed prior to the time the rejection was received. c. There was no contract because the rejection was mailed first. d. There was no contract because the acceptance was mailed more than three days subsequent to the rejection.