Thurmond, Inc., has two divisions, one located in New York and the other located in Arizona. New York sells a specialized circuit to Arizona and just recently raised the circuit’s transfer price. This price hike had no effect on the volume of circuits transferred nor on Arizona’s option of acquiring the circuit from either New York or from an external supplier. On the basis of this information, which of the following statements is most correct? a. The profit reported by New York will increase and the profit reported by Arizona will increase. b. The profit reported by New York will decrease, the profit reported by Arizona will increase, and Thurmond’s profit will be unaffected. c. The profit reported by New York will increase, the profit reported by Arizona will decrease, and Thurmond’s profit will be unaffected. d. The profit reported by New York will increase and the profit reported by Arizona will decrease.
Thurmond, Inc., has two divisions, one located in New York and the other located in Arizona. New York sells a specialized circuit to Arizona and just recently raised the circuit’s transfer price. This price hike had no effect on the volume of circuits transferred nor on Arizona’s option of acquiring the circuit from either New York or from an external supplier. On the basis of this information, which of the following statements is most correct? a. The profit reported by New York will increase and the profit reported by Arizona will increase. b. The profit reported by New York will decrease, the profit reported by Arizona will increase, and Thurmond’s profit will be unaffected. c. The profit reported by New York will increase, the profit reported by Arizona will decrease, and Thurmond’s profit will be unaffected. d. The profit reported by New York will increase and the profit reported by Arizona will decrease.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 4CMA: Morrisons Plastics Division, a profit center, sells its products to external customers as well as to...
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Thurmond, Inc., has two divisions, one located in New York and the other located in Arizona. New York sells a specialized circuit to Arizona and just recently raised the circuit’s transfer price. This price hike had no effect on the volume of circuits transferred nor on Arizona’s option of acquiring the circuit from either New York or from an external supplier. On the basis of this information, which of the following statements is most correct?
a. The profit reported by New York will increase and the profit reported by Arizona will increase.
b. The profit reported by New York will decrease, the profit reported by Arizona will increase, and Thurmond’s profit will be unaffected.
c. The profit reported by New York will increase, the profit reported by Arizona will decrease, and Thurmond’s profit will be unaffected.
d. The profit reported by New York will increase and the profit reported by Arizona will decrease.
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