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Company S has two divisions, X and Y. Division X transfers 50,000 component units to Division Y each quarter. The market price of the component is $20. Division X's variable cost is $10 per unit and its fixed cost is $150,000 each quarter.
What price would be credited to Division X for each component that it transfers to Division Y under:
two-part tariff pricing (where the two divisions have agreed that the fixed fee will be $100,000); and dual pricing (based on market price and marginal cost).
Suggested Answer: C
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8 comments · newest first
LA
Lauran
12 months ago
Totally agree, the numbers should align with the market trends!
AR
Aracelis
1 year ago
Fixed fee plus variable cost gives a clearer picture for pricing.
ER
Ernest
1 year ago
Wait, how does $22 come into play for dual pricing? Seems off.
KA
Karol
1 year ago
I think dual pricing should reflect the market price, so $20 makes sense.
TH
Theodora
1 year ago
Two-part tariff pricing should be based on fixed and variable costs.
OL
Olive
1 year ago
I'm a bit confused on this one. I'll need to review the details about QA links and how they interact with the Activity status and audience targeting.
SI
Silvana
1 year ago
Okay, let's think this through step-by-step. The key information is that CE-A is sending frames with a single tag of 100, and CE-B is expecting a frame with a top tag of 200 and bottom tag of 100. So we need to find the correct SAP ID for PE-B that will translate the single tag to the expected double tag.
ME
Melynda
1 year ago
This seems like a straightforward question about the components of ordering costs in the EOQ model. I'll need to recall the key factors that make up ordering costs for a manufacturing firm.