Required: 1. Assuming Mactan has no excess capacity and will lose outside sales if it supplies Mindoro: a. What would happen to the income of Mactan Division? b. What would happen to the income of Mindoro Division? C. What would happen to the income of Calapan Industries?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Mindoro Division of Calapan Industries manufactures furniture. Data on a sofa the division
makes follows:
Selling price per unit
Variable cost per unit:
Fabric
P175
Other Variable Cost 400
Contribution Margin
Required:
P 900
P 575
P325
Mindoro buys the fabric from an outside supplier. The manager of Mindoro learns that Mactan
Division of Calapan Industries makes a fabric that meets her requirements. Mactan sells the
fabric to outside customers for P200. Variable cost to Mactan is P125. Mindoro's manager
offers to buy the fabric at P150.
a. What would happen to the income of Mactan Division?
b. What would happen to the income of Mindoro Division?
c. What would happen to the income of Calapan Industries?
====
1. Assuming Mactan has no excess capacity and will lose outside sales if it supplies
Mindoro:
Transcribed Image Text:Mindoro Division of Calapan Industries manufactures furniture. Data on a sofa the division makes follows: Selling price per unit Variable cost per unit: Fabric P175 Other Variable Cost 400 Contribution Margin Required: P 900 P 575 P325 Mindoro buys the fabric from an outside supplier. The manager of Mindoro learns that Mactan Division of Calapan Industries makes a fabric that meets her requirements. Mactan sells the fabric to outside customers for P200. Variable cost to Mactan is P125. Mindoro's manager offers to buy the fabric at P150. a. What would happen to the income of Mactan Division? b. What would happen to the income of Mindoro Division? c. What would happen to the income of Calapan Industries? ==== 1. Assuming Mactan has no excess capacity and will lose outside sales if it supplies Mindoro:
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