Figure 12-3 Quinn Has Capacity to Make 950,000 Zippers Per Year, but \\
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Multiple Choice

Figure 12-3 $\begin{array}{ll}\text { Direct materials } & \$ 0.23 \\\text { Direct labor } & \$ 0.20 \\\text { Variable overhead } & \$ 0.95 \\\text { Fixed overhead } & \$ 1.32 \\\text { Total } & \$ 2.70\end{array}$ Quinn has capacity to make 950,000 zippers per year, but due to a soft market, only plans to produce and sell 620,000 zippers next year. LeatherStuff currently buys zippers from an outside supplier for $3.50 each (the same price that Style receives) .
-Refer to Figure 12-4. Assume that Quinn allows negotiated transfer pricing. What is the floor of the bargaining range and which division sets it?

A) $3.50; Style
B) $2.70; LeatherStuff
C) $2.70; Style
D) $1.38; LeatherStuff
E) $1.38; Style