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Carter Industries has two divisions: the West Division and the East Division. Information relating to the divisions for the year just ended is as follows:
Carter Industries has two divisions: the West Division and the East Division. Information relating to the divisions for the year just ended is as follows: Units produced and sold Selling price per unit Variable costs per unit Direct fixed cost Common fixed cost West 48,000 $ 8 4 66,000 58,000 East 37,000 $ 15 5 128,000 58,000 Common fixed expenses have been allocated equally to each of the two divisions. Carter's segment margin for the West Division is: $192,000. $126,000. $48,000 $134,000. The Crispy Baking Company is considering the expansion of its business into door-to-door delivery service. This would require an additional $12,500 in labor costs per month. Company-owned vehicles now used to make morning deliveries to restaurants could be used in the afternoons to make the home deliveries. However, it is estimated that an additional $5,000 would be required per month for gas, oil, and maintenance. It is further estimated that the home delivery use of the trucks would be allocated 45% of the existing $6,500 fixed vehicle costs. What is the differential delivery cost per month for expanding into the home delivery market? $12,500. O $17,500. $19,750. O $20,425
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