Question
33 5 pts MVS, Inc. produces cleaning equipment, and operates several divisions. Division A produces a product that it sells to other companies for $24
33 5 pts MVS, Inc. produces cleaning equipment, and operates several divisions. Division A produces a product that it sells to other companies for $24 per unit. It is currently operating at full capacity of 60,000 units per year. Variable manufacturing cost is $14 per unit, and variable marketing cost is $5 per unit. The company wishes to create a new division, Division B, to produce an innovative new tool that requires the use of Division A's product (or one very similar.) Division B will produce 20,000 units. Division B can. purchase a product equivalent to Division A's from Company X for $20 per unit. However, MVS, Inc. is considering having Division A supply Division B with the product. If Division A supplies Division B. the transfer price would be $18 and there would be no marketing costs associated with the units. Problem 5-1 From Division A's perspective the net benefit (cost) is? CO Net benefit of $360,000 O Net cost of $20,000 O Net cost of $120,000 ONet cost of $280,000
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