(Appendix 11A) Zeilinger Products, Inc., has a Screen Division that manufactures and sells a number of products, including a standard screen that could be used by another division in the company, the Home Security Division, in one of its products. Data concerning that screen appear below:
The Home Security Division is currently purchasing 8,000 of these screens per year from an overseas supplier at a cost of $58 per screen.
-Assume that the Valve Division is selling all of the valves it can produce to outside customers.From the standpoint of the Valve Division,what is the lost contribution margin if the valves are transferred internally rather than sold to outside customers?
Definitions:
Independent of One Another
A concept where events or variables do not affect or influence each other.
Annual Profit
The financial gain, often calculated before taxes, that a business makes within one fiscal year.
Homeowner's Policy
An insurance policy that provides coverage for a homeowner against losses or damages to their home and belongings inside it.
Catastrophe
An event causing great and often sudden damage or suffering; a disaster.
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