Division P of Turbo Corporation Has the Capacity for Making

question 154

Multiple Choice

Division P of Turbo Corporation has the capacity for making 75,000 wheel sets per year and regularly sells 60,000 each year on the outside market.The regular sales price is $100 per wheel set,and the variable production cost per unit is $65.Division Q of Turbo Corporation currently buys 30,000 wheel sets (of the kind made by Division P) yearly from an outside supplier at a price of $90 per wheel set.Division Q would like to buy the 30,000 wheel sets it needs annually from Division P at $87 per wheel set.What would be the change in annual operating income for the company as a whole,compared to what it is currently?

• A) $135,000.
• B) $225,000.
• C) $600,000.
• D) $750,000.

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Definitions:

Abbreviation C'BORE

The shorthand notation for "Counterbore," indicating a cylindrical flat-bottomed hole that enlarges another hole, often to hide a fastener head.

Cutting-plane Line

A line on a drawing that indicates the imaginary plane where a part is cut to reveal internal features.

Deep

A descriptive term used in various contexts to indicate a considerable distance from the surface or edge, often related to the dimension of a feature.

Depth

The measurement from the top surface to the bottom in an object, often used to specify the extent of features such as holes or cuts.