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The Van division of MotorCar Corporation has offered to purchase 180,000 wheels from the Wheel division for $42 per wheel. At a normal volume of
The Van division of MotorCar Corporation has offered to purchase 180,000 wheels from the Wheel division for $42 per wheel. At a normal volume of 5000,000 wheels per year, production costs per wheel for the Wheel Division are as follows: Direct materals...........$15 Direct labor................10 Variable overhead.........6 Fixedoverhead..............18 Total............................$49 The wheel division has been selling 500,000 wheels per year to outside buyers at $58 each. Capacity is 700,000 wheels per year. The Van Division has been buying wheels from outside suppliers at $55 per wheel. A. Should the Wheel Division manager accept the offer? Show computations/work. b. From the standpoint of the company, will the internal sale be beneficial
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