Division a Makes a Part with the Following Characteristics

question 108

Multiple Choice

Division A makes a part with the following characteristics: Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $24 each.Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division A refuses to accept the $24 price internally and Division B continues to buy from the outside supplier, the company as a whole will be:

• A) worse off by $30,000 each period.
• B) worse off by $10,000 each period.
• C) better off by $15,000 each period.
• D) worse off by $35,000 each period.

---

Definitions:

Amygdala

A central nervous system structure aroused by emotional events.

Global Attribution

The belief that a specific outcome will be repeated in many situations.

Successful

Achieving the desired results or goals.

Specific Attribution

The belief that a particular outcome is limited to a specific situation.