Division X Makes a Part with the Following Characteristics: Division

question 141

Multiple Choice

Division X makes a part with the following characteristics: Division Y of the same company would like to purchase 10,000 units each period from Division X.Division Y now purchases the part from an outside supplier at a price of $17 each.Suppose Division X has ample excess capacity to handle all of Division Y's needs without any increase in fixed costs and without cutting into sales to outside customers.If Division X refuses to accept the $17 price internally and Division Y continues to buy from the outside supplier,the company as a whole will be:

• A)worse off by $70,000 each period.
• B)better off by $10,000 each period.
• C)worse off by $60,000 each period.
• D)worse off by $20,000 each period.
• E)better off by $60,000 each period.

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Definitions:

Tropical Location

Geographic areas that are situated close to the equator, characterized by warm temperatures year-round and, in many cases, a high level of biodiversity.

Protected Area

A clearly defined geographical space, recognized and managed through legal or other effective means, to achieve the long-term conservation of nature.

Global Warming

The long-term rise in Earth’s average surface temperature, primarily due to human activities like burning fossil fuels, which releases greenhouse gases.

Agricultural Productivity

The measure of the output of agricultural products relative to the inputs used in production.