Question
Swan Company has two divisions, Hill and Paradise. Hill produces a unit that Paradise could use in its production. Paradise currently is purchasing 5,900 units
Swan Company has two divisions, Hill and Paradise. Hill produces a unit that Paradise could use in its production. Paradise currently is purchasing 5,900 units from an outside supplier for $65. Hill is operating at less than full capacity and has variable costs of $39.80 per unit. The full cost to manufacture the unit is $52.40. Hill currently sells 450,900 units at a selling price of $70.60. What would be the impact on Swan Company's overall profits if the internal transfer is made? Multiple Choice No change in profits $28,900 increase $148,680 increase $7,900 decrease
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