Oriole 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 25000 units to the Production Division at 1050 a unit. The Engine Division, currently operating at capacity, has a unit sales price of $2750 and unit variable costs and fixed costs of $1050 and $1700, respectively. The Production Division is currently paying $2600 per unit to an outside supplier. $100 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? Decrease $1250000 Increase $38750000 Increase $2363636 Decrease $3750000
Oriole 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 25000 units to the Production Division at 1050 a unit. The Engine Division, currently operating at capacity, has a unit sales price of $2750 and unit variable costs and fixed costs of $1050 and $1700, respectively. The Production Division is currently paying $2600 per unit to an outside supplier. $100 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? Decrease $1250000 Increase $38750000 Increase $2363636 Decrease $3750000
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Oriole 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 25000 units to the Production Division at 1050 a unit. The Engine Division, currently operating at capacity, has a unit sales price of $2750 and unit variable costs and fixed costs of $1050 and $1700, respectively. The Production Division is currently paying $2600 per unit to an outside supplier. $100 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?
Decrease $1250000
Increase $38750000
Increase $2363636
Decrease $3750000
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