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The Cycle Division of Sarasota Company has the following unit data related to its most recent cycle, the Roadbuster. Selling price Variable cost of
The Cycle Division of Sarasota Company has the following unit data related to its most recent cycle, the Roadbuster. Selling price Variable cost of goods sold $2,376 Body frame $324 Other variable costs 972 1,296 Contribution margin $1,080 Presently, the Cycle Division buys its body frames from an outside supplier. However Sarasota has another division, FrameBody, that makes body frames for other cycle companies. The Cycle Division believes that FrameBody's product is suitable for its new Roadbuster cycle. Presently, Frame Body sells its frames for $378 per frame. The variable cost for FrameBody is $286. The Cycle Division is willing to pay $294 to purchase the frames from Frame Body. (a) Assume that FrameBody has excess capacity and is able to meet all of the Cycle Division's needs. If the Cycle Division buys 1,080 frames from FrameBody, determine the following: (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses e.g. (45).) (1) Effect on the income of the Cycle Division $ (2) Effect on the income of Frame Body $ (3) Effect on the income of Sarasota
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