Question
The DVD Division of Sound Company makes and sells compact DVD players (DVDP) that it presently sells to outside customers. Budgeted costs next month for
The DVD Division of Sound Company makes and sells compact DVD players (DVDP) that it presently sells to outside customers. Budgeted costs next month for the DVD Division are as follows:
Sales of DVDPs to outside customers | 2,900 | units |
Selling price to outside customers | $160 | per unit |
Unit variable production costs | $110 | per unit |
MaxiSound, another division of Sound Company, would like to buy 1,050 of the DVDPs from the DVD Division. An outside supplier has offered to sell similar DVDPs to MaxiSound for 145 each. |
Assume the DVD Division's monthly production capacity is 4,500 units. If the DVD Division sells 1,050 DVDPs to MaxiSound for $145 each, the monthly effect on the profits of DVD Division will be a:
Please show work.
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