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Division a Makes a Part with the Following Characteristics

Question 15

Multiple Choice

Division A makes a part with the following characteristics: Division A makes a part with the following characteristics:   Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $24 each. -Suppose that Division A is operating at capacity and can sell all of its output to outside customers at its usual selling price. If Division A sells the parts to Division B at $24 per unit (Division B's outside price) , the company as a whole will be: A)  better off by $5,000 each period. B)  worse off by $15,000 each period. C)  worse off by $5,000 each period. D)  There will be no change in the status of the company as a whole. Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $24 each.
-Suppose that Division A is operating at capacity and can sell all of its output to outside customers at its usual selling price. If Division A sells the parts to Division B at $24 per unit (Division B's outside price) , the company as a whole will be:


A) better off by $5,000 each period.
B) worse off by $15,000 each period.
C) worse off by $5,000 each period.
D) There will be no change in the status of the company as a whole.

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