Question
Crash Company makes internal transfers at 160% of full cost. The Soda Refining Division purchases 40,000 containers of carbonated water per day, on average, from
Crash Company makes internal transfers at 160% of full cost. The Soda Refining Division purchases 40,000 containers of carbonated water per day, on average, from a local supplier, who delivers the water for $40 per container via an external shipper. To reduce costs, the company located an independent supplier in Illinois who is willing to sell 40,000 containers at $30 each, delivered to Crash Company's Shipping Division in Missouri. The company's Shipping Division in Missouri has excess capacity and can ship the 40,000 containers at a variable cost of $4.50 per container. What is the financial impact to the company by purchasing the container from the Illinois company?
Group of answer choices
$(608,000)
$220,000
$112,000
$(500,000)
Crash Company makes internal transfers at 180% of full cost. The Soda Refining Division purchases 50,000 containers of carbonated water per day, on average, from a local supplier, who delivers the water for $50 per container via an external shipper. To reduce costs, the company located an independent supplier in Illinois who is willing to sell 50,000 containers at $35 each, delivered to Crash Company's Shipping Division in Missouri. The company's Shipping Division in Missouri has excess capacity and can ship the 50,000 containers at a variable cost of $6.50 per container. What is the financial impact to the company by purchasing the container from the Illinois company?
Group of answer choices
$425,000
$132,000
$(780,000)
$(844,000)
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