Holiday Corp

question 1

Multiple Choice

Holiday Corp.has two divisions,Quail and Marlin.Quail produces a widget that Marlin could use in its production.Quail's variable costs are $4 per widget while the full cost is $7.Widgets sell on the open market for $12 each.If Quail has excess capacity,what would be the cost savings if the transfer were made and Marlin currently is purchasing 100,000 units on the open market?

• A)$0
• B)$700,000
• C)$800,000
• D)$1,200,000

---

Definitions:

Novation

The act of replacing one party or obligation in a contract with another, requiring the agreement of all parties involved.

Assignment

The transfer of rights, property, or obligations from one party to another, a common practice in contracts and financial transactions.

Delegation

The process of assigning responsibility and authority to another person to carry out specific activities.

Substantial Performance

A legal concept indicating that a party has completed enough of its contractual obligations to warrant payment or another form of compensation, even if minor details remain unfulfilled.