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Question 2 X Pic. a manufacturing company, has two divisions: Division A and Division B. Division A produces one type of product. product X. which
Question 2 X Pic. a manufacturing company, has two divisions: Division A and Division B. Division A produces one type of product. product X. which it transfers to Division B and also sells to extemal market. Division B has been approached by another company which has offered to supply 2500 units of product it for Shs. 35 each. The following details for Division A are available: Sales revenue I Shs I Sales to Division B 915.40 unit I 400,000 I External sales @ 45 per unit I 30,000 Less: Variable cost@Shs 22 per unit 352,000 Fixed costs I 100,000 Prot 218 000 Required: 1. What would bethe impact of reported profit to Division A and X Plc, assuming external sales of product X cannot be increased? 2. What advise would you give to division A and B as a result of your answer to 1 above
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