Question 3 (2 points) Phelps Company operates two divisions - the Manufacturing Division and the Assembly Division. The Manufacturing Division produces several different items which it sells to the Assembly Division and to external customers. One of the items has $85 of variable cost and $18 of fixed costs per unit at the normal level of production. The Manufacturing Division sells the item to its external customers for $130 per unit. The Assembly Division can purchase the item from the Manufacturing Division, or it can purchase a similar item from an external supplier for $125 per unit of the Manufacturing Division is currently operating at full capacity to satisfy the demand of its external customers, which of the following would be best for Phelps Company as a whole? A) Have the Assembly Division purchase the component from its external suppliers for $125 and not disrupt the Manufacturing Division's sales to its external customers. B) Have the Manufacturing Division sell the item to the Assembly Division for $85 even though the Manufacturing Division would lose sales to its external customers C) It does not matter. Either option would have the same impact on Phelps Company as a whole Question 4 (2 points) Which of the following would most likely cause an unfavorable labor quantity variance? A) More experienced workers were assigned to the job. B) The employees were given additional training. OC) The standard hourly wage was not updated after workers were given wage increases D) Lower quality materials which are more difficult to work with were used instead of the regular materials