Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Zachary Company has two divisions, A and B. Division A manufactures 6,400 units of product per month. The cost per unit Is calculated as follows.
Zachary Company has two divisions, A and B. Division A manufactures 6,400 units of product per month. The cost per unit Is calculated as follows. Division B uses the product created by Division A. No outside market for Division A's product exists. The fixed costs Incurred by Division A are allocated using headquarters-level facility-sustaining costs. The manager of Division A suggests that the product be transferred to Division B at a price of at least $27.50 per unit. The manager of Division B argues that the same product can be purchased from another company for $19.90 per unit and requests permission to do so. Required a-1. How much would Zachary gain or lose per unit If Division B were to purchase the product from the outside company for $19.90 per unit? Note: Round your answer to 2 decimal places. a-2. Is It In the best Interest of Zachary Company for Division B to purchase the product from an outside company
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started