Division X makes a part with the following characteristics: Production capacity 29,500 units Selling price to outside cu
Posted: Sun Jun 05, 2022 8:23 pm
Division X makes a part with the following characteristics:
Production capacity 29,500 units Selling price to outside customers
$ 27 Variable cost per unit $ 20 Fixed cost, total $ 104,500
Division Y of the same company would like to purchase 10,045 units
each period from Division X. Division Y now purchases the part from
an outside supplier at a price of $26 each. Suppose Division X has
ample excess capacity to handle all of Division Y's needs without
any increase in fixed costs and without cutting into sales to
outside customers. If Division X refuses to accept the $26 price
internally and Division Y continues to buy from the outside
supplier, the company as a whole will be
Production capacity 29,500 units Selling price to outside customers
$ 27 Variable cost per unit $ 20 Fixed cost, total $ 104,500
Division Y of the same company would like to purchase 10,045 units
each period from Division X. Division Y now purchases the part from
an outside supplier at a price of $26 each. Suppose Division X has
ample excess capacity to handle all of Division Y's needs without
any increase in fixed costs and without cutting into sales to
outside customers. If Division X refuses to accept the $26 price
internally and Division Y continues to buy from the outside
supplier, the company as a whole will be