The Assembly Division of Canadian Car Company Has Offered to Purchase

Essay

The Assembly Division of Canadian Car Company has offered to purchase 90,000 batteries from the Electrical Division for $104 per unit.At a normal volume of 250,000 batteries per year, production costs per battery are as follows:
The Electrical Division has been selling 250,000 batteries per year to outside buyers at $136 each.Capacity is 350,000 batteries per year.The Assembly Division has been buying batteries from outside sources for $130 each.Required:
a.Should the Electrical Division manager accept the offer as is, make a counter offer, or reject the offer? Explain.
b.From the company's perspective, will the internal sales be of any benefit? Explain