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Thomas Corp. has two divisions: East and West. One-third of the East Division's production is sold to the West Division of Thomas; the remainder is
Thomas Corp. has two divisions: East and West. One-third of the East Division's production is sold to the West Division of Thomas; the remainder is sold to outside customers. East Division's estimated sales and cost data for the year are as follows: Revenue Variable costs Fixed costs Gross margin Unit sales Sales to West Division $31,500 21,000 6,000 $ 4,500 21,000 Sales to Outsiders $ 84,000 42,000 28,500 $ 13,500 42,000 An outside supplier has offered to provide the West Division with 10,000 units of products at a cost of $150 per unit. Assume that East Division cannot sell additional products to outsiders and fixed costs are not avoidable. Should West Division be allowed to purchase the products from the outside supplier, and why? Multiple Choice Yes, because buying the blades would save Dana Company $5,000 In Miranda Co. produces washing machines. The following is a performance and cost summary: Per Unit Sales price $600 Variable costs 372 Unit contribution margin $228 Percent 100.00 62.00 38.00 Assume that Miranda Co. is currently selling 720 units per month and monthly fixed costs are $90,200. Miranda Co's degree of operating leverage (DOL) currently would be (round your answer to three decimal places): Multiple Choice 1.779
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