Crane Company manufactures and sells high-priced motorcycles. The Engine Division produces and sells engines to other motorcycle companies and internally to the Production Division. It has been decided that the Engine Division will sell 28000 units to the Production Division at 1050 a unit. The Engine Division, currently operating at capacity, has a unit sales price of $2650 and unit variable costs and fixed costs of $1050 and $1600, respectively. The Production Division is currently paying $2500 per unit to an outside supplier. $110 per unit can be saved on internal sales from reduced selling expenses. What is the increase/decrease in overall company profits if this transfer takes place? Increase $40600000 Decrease $1120000 Increase $2905660 Decrease $4200000
Crane Company manufactures and sells high-priced motorcycles. The Engine Division produces and sells engines to other motorcycle companies and internally to the Production Division. It has been decided that the Engine Division will sell 28000 units to the Production Division at 1050 a unit. The Engine Division, currently operating at capacity, has a unit sales price of $2650 and unit variable costs and fixed costs of $1050 and $1600, respectively. The Production Division is currently paying $2500 per unit to an outside supplier. $110 per unit can be saved on internal sales from reduced selling expenses. What is the increase/decrease in overall company profits if this transfer takes place? Increase $40600000 Decrease $1120000 Increase $2905660 Decrease $4200000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Crane Company manufactures and sells high-priced motorcycles. The Engine Division produces and sells engines to other motorcycle companies and internally to the Production Division. It has been decided that the Engine Division will sell 28000 units to the Production Division at 1050 a unit. The Engine Division, currently operating at capacity, has a unit sales price of $2650 and unit variable costs and fixed costs of $1050 and $1600, respectively. The Production Division is currently paying $2500 per unit to an outside supplier. $110 per unit can be saved on internal sales from reduced selling expenses.
What is the increase/decrease in overall company profits if this transfer takes place?
Increase $40600000
Decrease $1120000
Increase $2905660
Decrease $4200000
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