Division A makes a part with the following characteristics: Production capacity in units 31,100 units Selling price to outside customers $ 25 Variable cost per unit $ 19 Total fixed costs $ 107,200...




Division A makes a part with the following characteristics:






















Production capacity in units31,100 units
Selling price to outside customers$ 25
Variable cost per unit$ 19
Total fixed costs$ 107,200


Division B, another division of the same company, would like to purchase 16,500 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $22 each.



Suppose that Division A is operating at capacity and can sell all of its output to outside customers at its usual selling price. If Division A agrees to sell the parts to Division B at $22 per unit, the company as a whole will be:





Multiple Choice




  • worse off by $99&.





  • better off by $49&.





  • There will be no change in the status of the company as a whole.





  • worse off by $49&.






Jun 02, 2022
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