129. CSO: 1B2b LOS: 1B2k
Kern Manufacturing has several divisions and evaluates performance using segment
income. Since sales include transfers to other divisions, Kern has established a price for
internal sales as cost plus 10%. Red Division has requested 10,000 units of Green
Division’s product. Green Division is selling its product externally at a 60% markup
over cost. The corporate policy will encourage the Green Division to
a. transfer the product to the Red Division because all costs are being covered and
the division will earn a 10% profit.
b. reject the sale to the Red Division because it does not provide the same markup as
external sales.
c. accept the sale to the Red Division if it is operating at full capacity and the sale
will contribute to fixed costs.
d. transfer the product to the Red Division if it does not require the Green Division
to give up any external sales.
Bạn đang xem 129. - CMA EXAM SUPPORT PACKAGE 1