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The cycle division of TravelFast Company has the following cost data per unit for its most recent cycle, the Roadbuster: Selling price Variable cost
The cycle division of TravelFast Company has the following cost data per unit for its most recent cycle, the Roadbuster: Selling price Variable cost of goods sold $2,200 Body frame $304 Other variable costs 894 1,198. Contribution margin $1,002 The cycle division currently buys its body frames from an outside supplier. However, TravelFast 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. FrameBody sells its frames to outside customers for $345 per frame. The variable cost for Frame Body is $253. The cycle division is willing to pay $275 to purchase the frames from FrameBody. (a) Assume that Frame Body has excess capacity and is able to meet all of the cycle division's needs. If the cycle division buys 1,150 frames from FrameBody, determine the following: (Enter amounts that decrease income with either a-sign eg.-15,000 or in parenthesis eg. (15,000).) (1) The effect on the cycle division's income.
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