Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need detailed help with steps on how to solve , be ready for follow up questions on your explanation , show where each number

I need detailed help with steps on how to solve , be ready for follow up questions on your explanation , show where each number comes from :

The Post Division of Woodhead Company produces basic posts which can be sold to outside suppliers or sold to Lamp Division of the Woodhead Company. Last year, the Lamp Division bought all of its 25,000 posts from the Post Division. The following data are available for last year's activities of the Post Division :

Capacity in Units : 300,000

Selling Price Per Unit to Outside Customers : $1.75

Variable Cost Per Unit : $0.90

Fixed Costs Total : $150,000

Suppose the transfers of posts to Lamp Division cut into sales of Post Division by 15,000 units. Further, suppose that an outside supplier is willing to provide the Lamp Division with basic posts at $1.45 each.

Question : If Lamp Divsion has chosen to buy all of its posts from the outside supplier instead of the Post Division, the change in net operating income for the company as a whole would have been ? A) $1,250 decrease B) $10,250 increase C) $1,000 decrease D) $13,750 decrease E) None

Answer was shown as D) but I need help with steps as to how and why.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Organizational Network Analysis Auditing Intangible Resources

Authors: Anna Ujwary-Gil

1st Edition

1032085215, 978-1032085210

More Books

Students also viewed these Accounting questions

Question

What are the major classifications of curriculum theory?

Answered: 1 week ago

Question

Explain exothermic and endothermic reactions with examples

Answered: 1 week ago