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Assignment Instructions Centurion Inc. manufactures lighting equipment. It consists of several operating divisions within its business. Division A has decided to go outside the company
Assignment Instructions
Centurion Inc. manufactures lighting equipment. It consists of several operating divisions within its business. Division A has decided to go outside the company to purchase materials since Division B plans to increase its selling price for the same materials to $ Information for Division A and Division B is given in the following table.
Outside price for materials
$
Division As annual purchases
units
Division Bs variable costs per unit
$
Division Bs fixed costs, per unit This one should not be per unit basis, only Fixed Costs. Here, the firm is not considering Avg. Fixed Costs
$
Division Bs capacity utilisation
Task:
Will the company benefit if division A purchases outside the company? Assume that division B cannot sell its materials to outside buyers.
Assume that division B can save $ in fixed costs if it does not manufacture the material for division A Should division A purchase from the outside market?
Assume the situation in Task If the outside market value for the materials drops by $ should division A buy from the outside?
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