Use the following information to answer the following Questions
Genesis Scents has two divisions: the Cologne Division and the Bottle Division. The Bottle Division produces containers that can be used by the Cologne Division. The Bottle Division's variable manufacturing cost is $2, shipping cost is $0.10, and the external sales price is $3. No shipping costs are incurred on sales to the Cologne Division, and the Cologne Division can purchase similar containers in the external market for $2.60.
-The maximum amount the Cologne Division would be willing to pay for each bottle transferred would be:
A) $2.00.
B) $2.10.
C) $2.60.
D) $2.90.
E) $3.00.

Question

Quizplus · Accepted Answer

The maximum amount the Cologne Division would be willing to pay for each bottle transferred is $2.60, which is the price at which it can purchase similar containers in the external market. This represents the highest price the Cologne Division would pay without incurring additional costs compared to external purchasing options.

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