North Division Sells a Part Internally to South Division

Multiple Choice

North Division sells a part internally to South Division.South Division uses the part to produce inexpensive products sold at discount stores.North Division incurs costs of $1.50 per part,while South Division incurs additional costs of $4.80 per product.North Division sells the part to South Division for $2.00 per part.The final product is sold to external customers for $8.00 each.Which of the following formulas correctly reflects the company's operating income?

A) $8.00 - $1.50 - $4.80 - $2.00 = $(0.30)
B) $8.00 - $1.50 - $4.80 = $1.70
C) $8.00 - $4.80 -$2.00 = $1.20
D) $8.00 - $1.50 = $6.50