Question
Division A makes a part with the following characteristics: Division B, another division of the same company, would like to purchase 12,400 units of the
Division A makes a part with the following characteristics:
Division B, another division of the same company, would like to purchase 12,400 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $19 each.
Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division A refuses to accept the $19 price internally and Division B continues to buy from the outside supplier, the company as a whole will be:
Division A makes a part with the following characteristics: 33,300 units $ 21 $ 17 $105,000 Production capacity in units Selling price to outside customers Variable cost per unit Total fixed costs Division B, another division of the same company, would like to purchase 12,400 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $19 each. Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division A refuses to accept the $19 price internally and Division B continues to buy from the outside supplier, the company as a whole will be: Multiple Choice period worse offty 124,80 worse off by $24,800 each period. worse off by $49,600 each period. worse off by $25,000 each period. worse off by $44,000 each periodStep by Step Solution
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