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25. The South Department of a company has the option to purchase 15,000 units of materials from outside suppliers for $20 per unit or from
25. The South Department of a company has the option to purchase 15,000 units of materials from outside suppliers for $20 per unit or from the company's North Department, which sells the products for $15 per unit to outsiders. The North Department currently produces and sells 40,000 units but has capacity to produce 60,000 units. The department incurs variable costs of $5 per unit and total fixed costs of $25,000. Determine the change in income for each department using the following methods: a. Market price b. Negotiated price of $17.50 c. Cost approach using the variable product cost per unit 26. The Red Department has the option to purchase 5,000 units of materials from outside suppliers for $25 per unit or the Blue Department of the company, which sells to outside buyers for $22 per unit. The Blue Department is currently at full capacity, producing and selling 25,000 units and incurring fixed costs of $28,000 and variable costs of $15 per unit. Determine the change in income for each department using the following methods: a. Market price b. Negotiated price of $22.50 / c. Cost approach using the total cost per unit
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