Question
Exercise 10-23 Division A?s cost accounting records show that the cost of its product is $153 per unit?$100 in variable costs and $53 in fixed
Exercise 10-23
Division A?s cost accounting records show that the cost of its product is $153 per unit?$100 in variable costs and $53 in fixed costs. The market price of the product, $162, barely covers Division A?s cost of production plus its selling and administrative costs. Division A has a maximum capacity of 110,400 units; it is currently producing and selling 75,400 units. Division B makes a product that uses Division A?s product and would like to purchase 10,400 units from Division A for $151. With $44 additional variable costs, Division B produces and sells the product for $232. Division A?s manager is not happy with Division B?s offer and is refusing to sell. Calculate the increase in corporate income in the following situations:
| a. | Division A sells 10,400 units to Division B for $151 each, and Division B produces and sells 10,400 units for $232. |
| b. | Division A does not sell to Division B. Division B purchases 10,400 units from an external supplier at $162 each and produces and sells 10,400 units for $232. |
| Increase in corporate income | |
| a. | $ |
| b. | $ |
Exercise 10-23 Division A's cost accounting records show that the cost of its product is $153 per unit$100 in variable costs and $53 in fixed costs. The market price of the product, $162, barely covers Division A's cost of production plus its selling and administrative costs. Division A has a maximum capacity of 110,400 units; it is currently producing and selling 75,400 units. Division B makes a product that uses Division A's product and would like to purchase 10,400 units from Division A for $151. With $44 additional variable costs, Division B produces and sells the product for $232. Division A's manager is not happy with Division B's offer and is refusing to sell. Calculate the increase in corporate income in the following situations: a. Division A sells 10,400 units to Division B for $151 each, and Division B produces and sells 10,400 units for $232. Division A does not sell to Division B. Division B purchases 10,400 units from an external supplier at $162 each and produces and sells 10,400 units for $232. b. Increase in corporate income a. b. $ $
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Industrial Relations in Canada
Authors: Fiona McQuarrie
4th Edition
978-1-118-8783, 1118878396, 9781119050599 , 978-1118878392
