A company has 2 divisions: division A (DA) in Spain and division B (DB) in Ireland. DA produces a component sold to DB that DB sells to end-users. DA can produce 1,000 units of the component per year. Actually, it produces 700 units that are incorporated in the same number of final products that DB sells to end-users for 905 €. Data of DA: Variable cost/unit 435 € Fixed cost/unit 75€ FULL COST/UNIT 510 € Data of DB: Variable cost/unit 125 € Fixed cost/unit 55 € FULL COST/UNIT 180 € An external supplier offers DB 300 units of the same product provided by DA at 450 €. DB has the capacity to process those extra 300 units. Calculate the cost of 

a) buying those 300 units from the external supplier and

b) buying those 300 extra units internally?

Answer rating: 100% (QA)

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