Oberley Products, Incorporated, has a Receiver Division that manufactures and sells a number of products, including a standard receiver that could be used by another division in the company, the Industrial Products Division, in one of its products. Data concerning that receiver appear below: The Industrial Products Division is currently purchasing 5,000 of these receivers per year from an overseas supplier at a cost of $58 per receiver.What is the maximum price that the Industrial Products Division should be willing to pay for receivers transferred from the Receiver Division?
A) $52 per unit
B) $19 per unit
C) $58 per unit
D) $33 per unit

Question

Oberley Products, Incorporated, has a Receiver Division that manufactures and sells a number of products, including a standard receiver that could be used by another division in the company, the Industrial Products Division, in one of its products. Data concerning that receiver appear below:  The Industrial Products Division is currently purchasing 5,000 of these receivers per year from an overseas supplier at a cost of $58 per receiver.What is the maximum price that the Industrial Products Division should be willing to pay for receivers transferred from the Receiver Division?
A) $52 per unit 
B) $19 per unit 
C) $58 per unit 
D) $33 per unit

Quizplus · Accepted Answer

The maximum price that the Industrial Products Division should be willing to pay for the receivers transferred from the Receiver Division is the current cost per unit, which is $58. Therefore, the correct answer is C. Choosing any other price would result in an increased cost for the division.

Oberley Products, Incorporated, Has a Receiver Division That Manufactures and Sells