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Question
Submitted by abbttm on Sat, 2016-12-10 19:34
due on Wed, 2016-12-14 01:00
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In each of the cases below, assume that Division X has a product that can be sold either to outside customers or to Division Y of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits.

 

 Case
  A   B 
Division X:       
Capacity in units 103,000   94,000 
Number of units being sold to outside customers 103,000   71,000 
Selling price per unit to outside customers$55  $34 
Variable costs per unit$22  $15 
Fixed costs per unit (based on capacity)$9  $5 
Division Y:       
Number of units needed for production 23,000   23,000 
Purchase price per unit now being paid to an outside supplier$48  $30 
Answer
Submitted by WAQAS1ACA on Sat, 2016-12-10 19:36
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