Question
The machining division of Crane International has a capacity of 2,500 units. Its sales and cost data are: Selling price per unit $80 Variable manufacturing
The machining division of Crane International has a capacity of 2,500 units. Its sales and cost data are: Selling price per unit $80 Variable manufacturing costs per unit 25 Variable selling costs per unit 7 Total fixed manufacturing overhead 192,200 The machining division is currently selling 2,300 units to outside customers, and the assembly division of Crane International wants to purchase 400 units from machining. If the transaction takes place, the variable selling costs per unit on the units transferred to assembly will be $0/unit, and not $7/unit. If Crane's assembly division is currently buying from an outside supplier at $74 per unit, what will be the effect on overall company profits if internal sales for 400 units take place at the optimum transfer price? The company profits would select an option by $enter a dollar amount
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