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.

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Definitions:

Prescriptive

Relating to the imposition or application of rules and recommendations for behavior or action.

Brainstorming Method

A creative group problem-solving technique that involves generating a large number of ideas in order to find a solution to a particular issue.

Ranking

The act of arranging or grading individuals, items, or concepts according to their achieved level, performance, or quality.

Delphi Technique

A structured communication method that relies on a panel of experts answering questionnaires in two or more rounds to converge on a consensus solution or decision.