The Micro Division of Silicon Computers Produces Computer Chips That

question 33

Essay

The Micro Division of Silicon Computers produces computer chips that are sold to the Personal Computer Division and to outsiders. Operating data for the Micro Division are as follows:
The Personal Computer Division has just received an offer from an outside supplier to furnish chips at $8.60 each. The manager of Micro Division is not willing to meet the $8.60 price. She argues that it costs her $9.00 to produce and sell each chip. Sales to outside customers are at a maximum of 200,000 chips.
Required:
a. Verify the Micro Division's $9.00 unit cost figure.
b. Should the Micro Division meet the outside price of $8.60? Explain.
c. Could the $8.60 price be met and still show a profit for the Micro Division sales to the Personal Computer Division? Show computations.

---

Definitions:

Milgram's Study

An influential research project led by Stanley Milgram which showed that people are likely to follow orders from an authority figure, even to the extent of causing harm to others.

Group Size

The number of individuals forming a social or functional cluster, influencing the group's dynamics, interactions, and effectiveness.

Conformists

Individuals who comply with established standards, rules, or laws, often in order to fit in with a group.

Cooperation

The process of groups or individuals working together to achieve common goals or outcomes.