FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Subject: accounting 

Division X makes a part with the following characteristics:
Production capacity
Selling price to outside customers
Variable cost per unit
Fixed cost, total
Division Y of the same company would like to purchase 10,060 units each period from Division X. Division Y now purchases the part from an outside supplier at a price of $29 each. Suppose Division X has sufficient excess capacity to
handle all of Division Y's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division X refuses to accept the $29 price internally and Division Y continues to buy from the outside supplier, the
company as a whole will be:
Multiple Choice
O
worse off by $70,420 each period.
better off by $10,060 each period.
worse off by $60,360 each period.
worse off by $20,120 each period.
31,000 units
$ 30
$ 23
$ 106,000
better off by $60,360 each period.
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Transcribed Image Text:Division X makes a part with the following characteristics: Production capacity Selling price to outside customers Variable cost per unit Fixed cost, total Division Y of the same company would like to purchase 10,060 units each period from Division X. Division Y now purchases the part from an outside supplier at a price of $29 each. Suppose Division X has sufficient excess capacity to handle all of Division Y's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division X refuses to accept the $29 price internally and Division Y continues to buy from the outside supplier, the company as a whole will be: Multiple Choice O worse off by $70,420 each period. better off by $10,060 each period. worse off by $60,360 each period. worse off by $20,120 each period. 31,000 units $ 30 $ 23 $ 106,000 better off by $60,360 each period.
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