Use the Following Information for Questions

question 117

Multiple Choice

Use the following information for questions
Tuttle Motorcycles Inc. manufactures and sells high-priced motorcycles. The Engine Division produces and sells engines to other motorcycle companies and internally to the Production Division. It has been decided that the Engine Division will sell 20,000 units to the Production Division at $1,050 a unit. The Engine Division, currently operating at capacity, has a unit sales price of $2,550 and unit variable costs and fixed costs of $1,050 and $750, respectively. The Production Division is currently paying $2,400 per unit to an outside supplier. $90 per unit can be saved on internal sales from reduced selling expenses.
-What is the increase/decrease in overall company profits if this transfer takes place?

• A) Decrease $1,200,000
• B) Increase $2,520,000
• C) Decrease $3,000,000
• D) Increase $27,000,000

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Definitions:

Pressure

The force applied perpendicular to the surface of an object per unit area over which that force is distributed.

Power

The ability or capacity to direct or influence the behavior of others or the course of events.

Purchasing Decision

The process by which a consumer decides what they will buy, taking into account factors like price, quality, and personal preferences.

Aspirational Reference Group

A group that an individual aspires to belong to or identifies with, influencing their behavior and choices.