Division a of Sibley, Inc Division B Wants to Purchase Units from Division A

question 28

Multiple Choice

Division A of Sibley, Inc. has operating data as follows: $$\begin{array} { l l } \text { Capacity } & 20,000 \text { units } \\\text { Selling price } & \$ 80 \text { per unit } \\\text { Variable costs } & \$ 45 \text { per unit } \\\text { Fixed costs } & \$ 20 \text { per unit }\end{array}$$ Division B wants to purchase units from Division A. If Division A agrees to sell units to Division B, A's variable costs will be $5 less per unit.
If Division A is operating at capacity, what is the minimum price it should charge?

• A) $40
• B) $75
• C) $20
• D) $60

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Definitions:

Mass Extinction

The disappearance of many species and families of creatures in a geologically short period of time.

Flood Basalts

Vast plateau-forming volcanic eruptions that release large volumes of basaltic lava.

Fossil Record

The collection of all known fossils and their placement in rock formations and sedimentary layers, providing historical insights into life's past forms and environments.

Composite Volcano

A type of volcano built up by many layers (strata) of hardened lava, tephra, pumice, and volcanic ash.