(Appendix 11A) Division a Makes a Part with the Following

question 44

Multiple Choice

(Appendix 11A) 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:

Spontaneous Recovery

In behavioral psychology, the reappearance of a previously extinguished response following a rest period without further conditioning.

Proactive Interference

A phenomenon where old memories interfere with the retention of new information.

Short-term Memory

A temporary store for information, capable of holding a small amount of data for a short period before it is transferred to long-term memory or forgotten.

Long-term Memory

The phase of memory responsible for the storage of information over extended periods, potentially as long as a lifetime.