Use the following to answer questions 41-45: Hernandez Inc. has two divisions, P and Q, with the following information: Div. P Market price of finished component $33 Variable cost of finished component 20 Contribution margin $13 Total contribution for 35,000 components: $455,000 Div. Q Market price of final product $60 Variable cost: Division P (1 component @ $20) $20 Division Q 15 35 Contribution margin $25 Total contribution for 35,000 units: $875,000 continued The variable cost of Division Q will be incurred regardless of where it purchases the components, internally or externally. 41. If Division P wants to transfer the component to Division Q at a $40 transfer price, the manager of Division Q would A) buy from Division P because it would be in the best interests of the company as a whole. B) ask the manager of Division P to split the difference between the transfer price and market price, equally. C) not want to buy from Division P since the component could be purchased in the market for $33. D) buy from Division P as long as Division Q could supply enough quantity to make it profitable for Division Q. 42. Division Q would be willing to pay Division P as high as ____ for the component? A) $20 B) $30 C) $33 D) $60 43. If Division P has no excess capacity, the best transfer price under the general rule would be A) $60 B) $33 C) $30 D) $20 44. If Division P has no excess capacity, the lowest transfer price Division P would be willing to accept would be A) $20 B) $30 C) $33 D) $60 45. If Division P has excess capacity, ____ is the lowest transfer price it would be willing to accept from Division Q. A) $20 B) $30 C) $33 D) $60 Use the following to answer questions 34-36: The records of the Rodney Division of Corky Corporation showed the following for last year (000s omitted): Sales revenue $2,160 Accts. Rec. $ 495 Productive assets $1,620 Net Oper. Income $ 864 34. What is the sales margin for the Rodney Division? A) 13.33% B) 53.33% C) 40.00% D) 34.70% 35. What is the capital turnover for the Rodney Division? A) 1.333 B) .533 C) .400 D) .347 36. What is the return on investment for the Rodney Division? A) 13.33% B) 53.33% C) 40.00% D) 34.70% Use the following to answer questions 26-29: Data for the Rock Company are as follows: Budgeted Amounts: Machine Hours - 25 hours per unit Variable Overhead Rate - $.25 (25 cents) per machine hour Fixed Overhead - $800,000 Output 8,000 units Actual amounts: Variable overhead - $58,000 Fixed overhead - $810,000 Machine hours worked - 220,000 Actual output - 9,000 Units Budgeted machine hours per unit are used to allocate variable and fixed manufacturing overhead and a four-way variance analysis is used. 29. What is the fixed overhead volume variance? A) $80,000 unfavorable B) $80,000 favorable C) $100,000 favorable D) None of the above (A, B or C)