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one located in North and the other located in South. North sells a specialized circuit to South and just recently raised the circuit's transfer price. This C.C

one located in North and the other located in South. North sells a specialized circuit to South and just recently raised the circuit's transfer price. This C.C

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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4. Africa, Inc. has two divisions, one located in North and the other located in South. North sells a specialized circuit to South and just recently raised the circuit's transfer price. This price hike had no effect on either the volume of circuits transferred or on South's decision of whether to acquire the circuit from either North or from an external supplier. On the basis of this information, which of the following correctly shows the effect of the transfer price on the South divisional profit and Overall company profit? O (South, Overall) = (increase, increase) (South, Overall) = (decrease, no change) O (South, Overall) = (decrease, increase) O (South, Overall) = (increase, no change
Transcribed Image Text:4. Africa, Inc. has two divisions, one located in North and the other located in South. North sells a specialized circuit to South and just recently raised the circuit's transfer price. This price hike had no effect on either the volume of circuits transferred or on South's decision of whether to acquire the circuit from either North or from an external supplier. On the basis of this information, which of the following correctly shows the effect of the transfer price on the South divisional profit and Overall company profit? O (South, Overall) = (increase, increase) (South, Overall) = (decrease, no change) O (South, Overall) = (decrease, increase) O (South, Overall) = (increase, no change
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