Question: Division Sof Kracker Company makes a part that it sells to other companies. Data on that part appear below: Selling price on the intermediate market
Division Sof Kracker Company makes a part that it sells to other companies. Data on that part appear below: Selling price on the intermediate market 30 per Variable costs per unit $ unit $ 22 per unit $ 7 per unit 50,000 units Fixed costs per unit (based on capacity) Capacity in urits Division B, another division of Kracker Company, presently is purchasing 10,000 units of a similar product each period from an outside supplier for $28 per unit, but would like to begin purchasing from Division S. Suppose that Division Scan sell all that it can produce to outside customers. If Division S sells to Division B at a price of $28 per unit, the company as a whole will be: worse off by $80,000 each period. worse off by $70,000 each period. O better off by $20,000 each period. worse off by $20,000 each period
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