Your local fast-food chain with two dozen stores uses the company\'s internal co

Question

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 $130 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. $143.00 $182.00 $175.50 $156.00

Explanation / Answer

All the options are correct

Reason

The marketing department gets $130 for each of the order. Thus, if the marginal cost is higher than that, the marketing department will not be able to make a profit, Thus, all the options are correct.

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