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Q1 Single choice

Assume that the Plastics Division has excess capacity and it has negotiated a transfer price of $5.60 per plastic component with the Entertainment Division. This price will

  • A

    Cause the Plastics Division to reduce the number of commercial plastic components it manufactures.

  • B

    Motivate both divisions as estimated profits are shared.

  • C

    Encourage the Entertainment Division to seek an outside source for plastic components

  • D

    Demotivate the Plastics Division causing mediocre performance

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