Highpointe Division Sells a Part Internally to Low Division

question 106

Multiple Choice

Highpointe Division sells a part internally to Low Division.Low Division uses the part to produce inexpensive products sold at discount stores.Highpointe Division incurs costs of $1.50 per part,while Low Division incurs additional costs of $4.80 per product.Highpointe Division sells the part to Low Division for $2.00 per part. Low Division can purchase the part from an outside supplier for $1.00 per part,but does not accept the offer.The final product is sold to external customers for $8.00 each.Which of the following formulas correctly reflects the company's operating income?

• A)$8.00 - $1.50 - $4.80 - $2.00 - $1.00 = $(1.30)
• B)$8.00 - $1.50 - $4.80 = $1.70
• C)$8.00 - $4.80 - $2.00 = $1.20
• D)$8.00 - $1.50 = $6.50

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Definitions:

VALS Profile

A psychographic tool developed to categorize consumers into types based on their values, attitudes, and lifestyles to better understand buying behavior.

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A technology that allows people in different locations to hold face-to-face meetings without needing to be in the same place, through the Internet and video equipment.