Tuttle Motorcycles Inc

question 47

Multiple Choice

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

---

Definitions:

Express Authority

Pertains to the power explicitly granted by one party to another, typically in writing, to perform specific acts or functions.

Implied Authority

Powers not expressly stated but assumed to be granted in order for an individual to carry out duties effectively.

Apparent Authority

A situation where a third party reasonably believes an individual has the authority to act on behalf of another (such as an employer), even if that person does not have actual authority.

Ratified

An agreement or decision that has been formally approved and confirmed by the required parties.