The Nicholson and Cage Divisions are in the same company.Currently the Cage Division buys a part from the Nicholson Division for $82 per unit.The Nicholson Division wants to increase the price of the part to $100 per unit.Cage Division can buy the part for $94 from an outside supplier.The cost data for the part obtained from the Nicholson Division is below:
If Nicholson does not provide the parts to Cage,it will save one-fourth of the fixed indirect production costs.The Nicholson Division has excess capacity but no alternative uses of the facilities.
Required:
A)From the standpoint of the company as a whole,should Cage Division continue to buy the part from Nicholson Division?
B)From the standpoint of Cage Division only,should Cage Division continue to buy the part from Nicholson Division?
Definitions:
Antidiuretic Hormone
A hormone that helps regulate water balance in the body by controlling the amount of water reabsorbed by the kidneys.
Serum Sodium Level
The concentration of sodium in the blood, an important measure for assessing electrolyte balance and hydration status.
Infiltration
The process by which a fluid passes into tissues, often referring to the unintentional infusion of intravenous fluid into the surrounding tissue.
Blood Transfusion
The process of transferring blood or blood products from one person into the circulatory system of another, used to replace lost components of the blood, often in surgeries or for patients with blood disorders.
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