Division P of Turbo Corporation Has the Capacity for Making

question 125

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:

Anorexia Nervosa

A psychological disorder characterized by an extreme fear of gaining weight and a distorted body image, leading to severe restriction of food intake.

Laxative

A substance that helps stimulate or facilitate bowel movements, often used to alleviate constipation.

Sleep

A state of rest in which consciousness is suspended and the body is able to recover and heal.

Health-Care Provider

A professional or organization that offers medical services to individuals, ranging from diagnosis and treatment to preventative care.