Answer the Following Questions Using the Information Below:
Calculate the Division

question 8

Multiple Choice

Answer the following questions using the information below:
Calculate the Division operating profit for the Don's Cricket Bat Company which manufactures cricket bats.It has two divisions: the Bat Blade Division and the Assembly Division.The Bat Blade Division manufactures blades for the Assembly Division,which splices handles to the blades and sells the completed bats to retailers.The Bat Blade Division 'sells' blades to the Assembly Division.The market price for the Assembly Division to purchase a blade is $40.(Ignore changes in inventory. ) The fixed costs for the Bat Blade Division are assumed to be the same over the range of 20 000-50 000 units.The fixed costs for the Assembly Division are assumed to be $14 per bat at 50 000 units.
Costs per blade are:
$\begin{array}{ll}\text { Direct materials } & \$ 8 \\\text { Direct labour } & \$ 6 \\\text { Variable overhead } & \$ 4 \\\text { Division fixed costs } & \$ 2\end{array}$

Assembly's costs per completed bat are:
$\begin{array} { l r } \text { Direct materials } & \$ 12 \\ \text { Direct labour } & \$ 4 \\ \text { Variable overhead } & \$ 1 \\ \text { Division fixed costs } & \$ 14 \end{array}$
-What is the operating profit of both divisions together if the Assembly Division sells 50 000 blades at a price of $120 a pair to customers?

• A)$2 600 000
• B)$3 400 000
• C)$3 000 000
• D)$4 400 000

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Sense of Satisfaction

The feeling of contentment or fulfillment that comes from achieving or accomplishing something.

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The tendency to process information by looking for, or interpreting, information that is consistent with one’s existing beliefs.

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An individual or group used to test ideas or concepts to gauge their validity or effectiveness before public release.

Middle Ages

A historical period in Europe stretching from the 5th to the late 15th century, characterized by feudalism, the spread of Christianity, and the emergence of the Renaissance in Italy.