Quinn Inc.has a number of divisions.One division, Style, makes zippers that are used in the manufacture of boots.Another division, LeatherStuff, makes boots that use the zippers and needs 90,000 zippers per year.Style incurs the following costs for one zipper:

Quinn has capacity to make 950,000 zippers per year, but due to a soft market, only plans to produce and sell 620,000 zippers next year.LeatherStuff currently buys zippers from an outside supplier for $3.50 each (the same price that Style receives)
-Assume that Style and LeatherStuff have agreed on a transfer price of $3.25.What are the total cost savings for LeatherStuff?

A) $22,500
B) $315,000
C) $292,500
D) $69,000
E) $81,000

Question

Quinn Inc.has a number of divisions.One division, Style, makes zippers that are used in the manufacture of boots.Another division, LeatherStuff, makes boots that use the zippers and needs 90,000 zippers per year.Style incurs the following costs for one zipper:

Quinn has capacity to make 950,000 zippers per year, but due to a soft market, only plans to produce and sell 620,000 zippers next year.LeatherStuff currently buys zippers from an outside supplier for $3.50 each (the same price that Style receives)
-Assume that Style and LeatherStuff have agreed on a transfer price of $3.25.What are the total cost savings for LeatherStuff?

A) $22,500 
B) $315,000 
C) $292,500 
D) $69,000 
E) $81,000

Quizplus · Accepted Answer

11ea8a4c_4967_5e6c_a0e6_91c8df861639_TB5550_00

Quinn IncHas a Number of Divisions