Answer: [e] $1.44 Gamma.
Explanation:
As Gamma has excess capacity there is no opportunity cost in selling to Delta. Hence, the lowest price that Gamma can afford is the variable cost, which, is $1.44 (0.25+0.22+0.97).
Full Serve Inc. has a number of divisions. One division, Gamma, makes zippers that are used...
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Transfer PricingAulman Inc. has a number of divisions, including a Furniture Division and a Motel Division. The Motel Division owns and operates a line of budget motels located along major highways. Each year, the Motel Division purchases furniture for the motel rooms. Currently, it purchases a basic dresser from an outside supplier for $40. The manager of the Furniture Division has approached the manager of the Motel Division about selling dressers to the Motel Division. The full product cost of...