1) Identify each responsibility center as a costcenter, a revenuecenter, a profitcenter, or an investment center.

a. Baskin-Robbins is a subsidiary ofDunkin' Brands;Dunkin' Brands owns and operates nearly2,500 ice cream specialty stores in the United States.

2) Fill in the blanks with the word or phrase that best completes each sentence. Not all words and phrases areused, and some may be used more than once.

cost center

investment center

lower

revenue center

responsibility center

higher

profit center

the same

a. The Foodservice Sales Territory Manager in charge of GeneralMills' GreaterBaltimore/Washington, D.C., sales territory overseesa(n)

3) Graham Motors manufactures specialty tractors. It has twodivisions: a Tractor Division and a Tire Division. The Tractor Division can use the tires produced by the Tire Division. The market price per tire is $ 85. The Tire Division has the following costs pertire:

Direct material cost per tire $ 25

Conversion costs per tire $ 3 (Assume the $ 3 includes only the variable portion of conversioncosts.)

Fixed manufacturing overhead cost for the year is expected to total $110,000. The Tire Division expects to manufacture 55,000 tires this year. The fixed manufacturing overhead per tire is $ 2 ($110,000 divided by 55,000 tires).

Requirement 1. Assume that the Tire Division has excesscapacity, meaning that it can produce tires for the Tractor Division without giving up any of its current tire sales to outsiders. If Graham

Graham Motors has a negotiated transfer pricepolicy, what is the lowest acceptable transferprice? What is the highest acceptable transferprice? (Assume the $ 3 includes only the variable portion of conversioncosts.)

The lowest acceptable transfer price is $ , the Tire Division's (DM cost per tier, market price per tier, total cost per tier, variable cost per tier).