5. 10-97 Spice Company has two divisions, Parsley and Sage. Parsley could use in its production....

Transcribed Image Text:

5. 10-97 Spice Company has two divisions, Parsley and Sage. Parsley could use in its production. Sage currently is purchasing 49,800 units from an outside supplier for $48.00. Parsley is operating at less than its full capacity of 550,000 and has variable costs of $25.00 per unit. The full cost to manufacture the unit is $36.00. Parsley currently sells 450,000 units at a selling price of $52.00. If an internal transfer is made, variable shipping and administrative costs of $2.00 per unit could be avoided. What would be the impact on Spice Company's overall profits if the internal transfer were made? A. $1,154,400 increase in profits B. $1,444,200 decrease in profits C. $1,245,000 increase in profits D. $199,200 decrease in profit 5. 10-97 Spice Company has two divisions, Parsley and Sage. Parsley could use in its production. Sage currently is purchasing 49,800 units from an outside supplier for $48.00. Parsley is operating at less than its full capacity of 550,000 and has variable costs of $25.00 per unit. The full cost to manufacture the unit is $36.00. Parsley currently sells 450,000 units at a selling price of $52.00. If an internal transfer is made, variable shipping and administrative costs of $2.00 per unit could be avoided. What would be the impact on Spice Company's overall profits if the internal transfer were made? A. $1,154,400 increase in profits B. $1,444,200 decrease in profits C. $1,245,000 increase in profits D. $199,200 decrease in profit