Use the following to answer questions 4-5: Division A produces a part with the following characteristics: Capacity in Units Selling Price per Unit Variable Costs per Unit Fixed Costs per Unit 50,000 units $30 $18 $ 3 Division B, another division in the company, would like to buy this part from Division A. Division B is presently purchasing 4,000 parts from an outside source at $27 per unit. If Divi A sells to Division B, $2 in variable costs can be avoided. 4. Suppose Division A is currently operating at capacity and can sell all of the units it produces on the outside market for its usual selling price. From the point of view of Division A, any sales to Division B should be priced no lower than which of the
Use the following to answer questions 4-5: Division A produces a part with the following characteristics: Capacity in Units Selling Price per Unit Variable Costs per Unit Fixed Costs per Unit 50,000 units $30 $18 $ 3 Division B, another division in the company, would like to buy this part from Division A. Division B is presently purchasing 4,000 parts from an outside source at $27 per unit. If Divi A sells to Division B, $2 in variable costs can be avoided. 4. Suppose Division A is currently operating at capacity and can sell all of the units it produces on the outside market for its usual selling price. From the point of view of Division A, any sales to Division B should be priced no lower than which of the
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 17E: Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside...
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