Your local fast-food chain with two dozen stores uses the company's internal corporate marketing department to produce signage, print ads, in-store displays, and so forth. When placing an order, store managers are assessed a chargeback (transfer price) of $80 per order that reduces store profitability but increases marketing department profitability. Lately, the store managers have been ordering more and more marketing services:
Your local fast-food chain with two dozen stores uses the company's internal corporate marketing department to produce signage, print ads, in-store displays, and so forth. When placing an order, store managers are assessed a chargeback (transfer price) of $80 per order that reduces store profitability but increases marketing department profitability. Lately, the store managers have been ordering more and more marketing services:
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Your local fast-food chain with two dozen
stores uses the company's internal corporate
marketing department to produce signage,
print ads, in-store displays, and so forth.
When placing an order, store managers are
assessed a chargeback (transfer price) of $80
per order that reduces store profitability but
increases marketing department profitability.
Lately, the store managers have been
ordering more and more marketing services;
the marketing department is swamped, and it
cannot afford to hire more staff.
Which of the following dollar figures is a
possible value for the marginal cost per order
of the marketing department? In other words,
which marginal cost per order for the
marketing department would be consistent
with this situation? Check all that apply.
$104.00
$96.00
$72.00
$108.00
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