Division A produces a part with the following characteristics: Capacity in units 50,000 Selling price per unit$30 Variable costs per unit$18 Fixed costs per unit$3 Division B, another division in the company, would like to buy this part from Division A. Division B is currently purchasing the part from an outside source at $28 per unit. If Division A sells to Division B, $1 in variable costs can be avoided.Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without impacting sales to outside customers. From the point of view of Division A, any sales to Division B should be priced no lower than:
A. $18.
B. $17.
C. $30.
D. $29.
Answer: B
You might also like to view...
A gain or loss that qualifies for extraordinary treatment on the income statement must have which of the following qualities? I. Unusual in Nature II. Discontinued Segment III. Infrequent in Occurrence IV. Nonoperating in Nature V. Never Occurred
a. I and V b. III and IV c. I and III d. I, II, and III
If an indorsement contains the signature of the indorser along with the words indicating to whom, or to whose order, the instrument is payable, it can be termed as a ________ indorsement.
A. restrictive B. blank C. qualified D. special
Answer the following statements true (T) or false (F)
The type of reward that has received more attention in literature and the workplace are natural rewards.
What are dysfunctional beliefs and assumptions and why is the removal of these critical for the effective self-leader? How can having positive and rational beliefs shape the actions and effectiveness of an individual?
What will be an ideal response?