Wengert Products, Incorporated, Has a Motor Division That Manufactures and Sells

question 89

Multiple Choice

Wengert Products, Incorporated, has a Motor Division that manufactures and sells a number of products, including a standard motor. Data concerning that motor appear below: The Automotive Division of Wengert Products, Inc needs 8,000 special heavy-duty motors per year. The Motor Division's variable cost to manufacture and ship this special motor would be $20 per unit. Because these special motors require more manufacturing resources than the standard motor, the Motor Division would have to reduce its production and sales of standard motors to outside customers from 40,000 units per year to 27,200 units per year.What is the total contribution margin on sales to outside customers that the Motor Division would give up if it were to make the special motors for the Automotive Division?

• A) $336,000
• B) $537,600
• C) $860,160
• D) $755,200

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Definitions:

Difference Principle

A concept from political philosophy suggesting that inequalities in society are only justifiable if they benefit the least advantaged members.

Inequality Principle

A concept in social and political philosophy suggesting that social or economic inequalities are justified only if they benefit the least advantaged members of society.

Institutions

Established organizations or systems in society with specific purposes and roles, such as educational, religious, or governmental entities.

Well-Ordered Society

A society in which there are mutually accepted principles of justice governing the basic structure of the main institutions.