Question
A. Division X makes a part with the following characteristics: Production capacity 27,000 units Selling price to outside customers $ 22 Variable cost per unit
A. Division X makes a part with the following characteristics: Production capacity 27,000 units Selling price to outside customers $ 22 Variable cost per unit $ 15 Fixed cost, total $ 102,000 Division Y of the same company would like to purchase 10,020 units each period from Division X. Division Y now purchases the part from an outside supplier at a price of $21 each. Suppose Division X has ample excess capacity to handle all of Division Y's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division X refuses to accept the $21 price internally and Division Y continues to buy from the outside supplier, the company as a whole will be:
Multiple Choice:
-
worse off by $70,140 each period.
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better off by $10,020 each period.
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worse off by $60,120 each period.
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worse off by $20,040 each period.
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better off by $60,120 each period.
B.
Kragle Corporation reported the following financial data for one of its divisions for the year; average invested assets of $520,000; sales of $1,080,000; and income of $125,000. The investment turnover is:
Multiple Choice:
19.90
48.10 2.08 416.00 11.60.
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