SAMMI Manufacturing has two divisions.Division A makes a part with the following characteristics:Production capacity in units15,000 unitsSelling price to outside customers ..Variable cost per unit........£25£18£60,000Total fixed costsDivision B, of the same company, would like to purchase 5,000 units of the parteach period from Division A. Division B is now purchasing these parts from anoutside supplier at a price of £24 each.Suppose that Division A has ample idle capacity to handle all of Division B'sneeds without any increase in fixed costs and without cutting into sales to outsidecustomers. If Division B continues to purchase parts from an outside supplierrather than from Division A, the company as a whole will be:a.b.C.dBetter off by £15,000 each period.Worse off by £10,000 each period.Worse off by £30,000 each period.Worse off by £35,000 each period.

Internal transfer means where one independent department is transferring the goods to another…

Answered: SAMMI Manufacturing has two divisions.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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