Division a Produces a Part with the Following Characteristics Division B, Another Division in the Company, Would Like to

question 1

Multiple Choice

Division A produces a part with the following characteristics:
$\begin{array}{lrr}\text { Capacity in units } & 50,000 \\\text { Selling price per unit } & \$ 30 \\\text { Variable costs per unit } & \$ 18 \\\text { Fixed costs per unit } & \$ 3\end{array}$
Division B, another division in the company, would like to buy this part from Division A. Division B is currently purchasing the part from an outside source at $28 per unit. If Division A sells to Division B, $1 in variable costs can be avoided.
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Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without impacting sales to outside customers. From the point of view of Division A, any sales to Division B should be priced no lower than:

• A) $29.
• B) $30.
• C) $18.
• D) $17.

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Definitions:

Gasoline

A liquid fuel made from petroleum and used primarily as fuel in internal combustion engines.

Chemical Weathering

The breakdown of rocks and minerals through chemical reactions with atmospheric agents such as oxygen, water, and acids, leading to the formation of new minerals and soil.

Physical Weathering

The breakdown of rocks and minerals into smaller pieces by physical forces without chemical alteration.

Soil Formation

The process by which rocks break down and decompose over time to form soil, influenced by factors like climate, organisms, topography, and time.