Infobytes Corporation Infobytes Corporation manufactures and sells various high-tech office automation products. Two divisions of Infobytes Corporation are the Computer Chip Division and the Computer Division. The Computer Chip Division manufactures one product, a "super chip," that can be used by both the Computer Division and other external customers. The following information is available on this month's operations in the Computer Chip Division:
Presently, the Computer Division purchases no chips from the Computer Chips Division, but instead pays $45 to an external supplier for the 4,000 chips it needs each month.
Refer to Infobytes Corporation. Assume that next month's costs and levels of operations in the Computer and Computer Chip Divisions are similar to this month. What is the maximum of the transfer price range for a possible transfer of the chip from one division to the other?
A) $50
B) $45
C) $35
D) $30

Question

Infobytes Corporation Infobytes Corporation manufactures and sells various high-tech office automation products. Two divisions of Infobytes Corporation are the Computer Chip Division and the Computer Division. The Computer Chip Division manufactures one product, a "super chip," that can be used by both the Computer Division and other external customers. The following information is available on this month's operations in the Computer Chip Division:
 Presently, the Computer Division purchases no chips from the Computer Chips Division, but instead pays $45 to an external supplier for the 4,000 chips it needs each month.
Refer to Infobytes Corporation. Assume that next month's costs and levels of operations in the Computer and Computer Chip Divisions are similar to this month. What is the maximum of the transfer price range for a possible transfer of the chip from one division to the other?
A) $50 
B) $45 
C) $35 
D) $30

Quizplus · Accepted Answer

The maximum transfer price would be equal to the price the Computer Division is currently paying an external supplier, which is $45 per chip. Therefore, the answer is B.

Infobytes Corporation Infobytes Corporation Manufactures and Sells Various High-Tech Office