The following information relates to the Smart Division of Mobile TeleCom Co.: .80,000 units Budgeted Sales Selling price... Variable cost per unit .... P 32.00 per unit P 20.00 per unit P 600,000.00 P1,500,000.00 18 percent Annual direct fixed cost, unavoidable Total divisional investment Minimum required rate of return
Assume that Smart expects to produce and sell 80,000 units but has the capacity to produce 100,000 units. The manager of Globe Division, which is currently buying 30,000 units of a similar product from outside supplier for P26.50, offers to buy the units from the Smart division only if Smart will supply 30,000 units needed.
1A. What is the maximum price Globe’s manager is likely to offer for the units?
1B. What is the minimum price Smart manager is likely to accept on a sale of 30,000 units to Globe?
1C. If Globe manager offers P24.50 per unit and Smart manager accepts the offer, what will be the amount and direction of the effect on the total income of Smart division, Globe division and Mobile TeleCom? Increasing or Decreasing direction?
Help answer 1A to 1C with solution pls
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