Given the following data for Handle Division: Selling price to outside customers $ 185 Variable cost per unit 100 Fixed cost per unit (based on capacity) 40 Capacity (in units) 60,000 The Cabinet Division would like to purchase 11,000 units from the Handle Division at a price of $160 per unit. Handle Division has no excess capacity to handle the Cabinet Division's requirements. The Cabinet Division currently purchases from an outside supplier at a price of $175. If the Handle Division accepts a $160 price internally, the company, as a whole, will be better or worse off by: Multiple Choice $275,000 $165,000 $825,000 $(110,000)
Given the following data for Handle Division: Selling price to outside customers $ 185 Variable cost per unit 100 Fixed cost per unit (based on capacity) 40 Capacity (in units) 60,000 The Cabinet Division would like to purchase 11,000 units from the Handle Division at a price of $160 per unit. Handle Division has no excess capacity to handle the Cabinet Division's requirements. The Cabinet Division currently purchases from an outside supplier at a price of $175. If the Handle Division accepts a $160 price internally, the company, as a whole, will be better or worse off by: Multiple Choice $275,000 $165,000 $825,000 $(110,000)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Given the following data for Handle Division:
| Selling price to outside customers | $ | 185 | |
| Variable cost per unit | 100 | ||
| Fixed cost per unit (based on capacity) | 40 | ||
| Capacity (in units) | 60,000 | ||
The Cabinet Division would like to purchase 11,000 units from the Handle Division at a price of $160 per unit. Handle Division has no excess capacity to handle the Cabinet Division's requirements. The Cabinet Division currently purchases from an outside supplier at a price of $175. If the Handle Division accepts a $160 price internally, the company, as a whole, will be better or worse off by:
Multiple Choice
-
$275,000
-
$165,000
-
$825,000
-
$(110,000)
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