Given the Following Data for Keyboard Division The Computer Division Would Like to Purchase 15,000 Units Each

question 81

Multiple Choice

Given the following data for Keyboard Division:
$$\begin{array} { ll} \text { Selling price to outside customers } & \$ 25 \\\text { Variable cost per unit } & \$ 12 \\\text { Total fixed cost } & \$ 50,000 \\\text { Capacity (in units) } & 125,000\end{array}$$
The Computer Division would like to purchase 15,000 units each period from the Keyboard Division. The Keyboard Division has ample excess capacity to handle all of the Computer Division's needs. The Computer Division now purchases from an outside supplier at a price of $20. If the Keyboard Division refuses to accept an $18 price internally, the company, as a whole, will be worse off by:

• A) $30,000.
• B) $75,000.
• C) $90,000.
• D) $120,000.

Analyze inventory investment changes over a period.

Grasp the criterion for borrowing money for investment purposes.

Identify different methods of providing savings to corporations.

Understand the concept and implications of negative components in investment.

---

Definitions:

Marginal Cost

The additional cost incurred by producing one more unit of a product or service, crucial for economic and pricing decisions.

Marginal Revenue

The additional income received from selling one more unit of a product or service.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Profit Maximizing Firm

A company that focuses on actions that would increase its profits to the highest possible extent.