Question
Division P of Launch Corporation has the capacity for making 76,500 wheel sets per year and regularly sells 61,500 each year on the outside market.
Division P of Launch Corporation has the capacity for making 76,500 wheel sets per year and regularly sells 61,500 each year on the outside market. The regular sales price is $115 per wheel set, and the variable production cost per unit is $77. Division Q of Launch Corporation currently buys 31,500 wheel sets (of the kind made by Division P) yearly from an outside supplier at a price of $105 per wheel set. If Division Q were to buy the 31,500 wheel sets it needs annually from Division P at $99 per wheel set, the change in annual net operating income for the company as a whole, compared to what it is currently, would be:
-
$765,000
-
$138,000
-
$255,000
-
$882,000
-
$615,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started