Use the Information Below to Answer the Following Question(s)

question 164

Multiple Choice

Use the information below to answer the following question(s) .Crush Company makes internal transfers at 180% of full cost.The Soda Refining division purchases 30,000 containers of carbonated water per day, on average, from a local supplier, who delivers the water for $30 per container via an external shipper.In order to reduce costs the company located an independent producer in Manitoba who is willing to sell 30,000 containers at $20 each, delivered to Crush Company's shipping division in Manitoba.The company's Shipping Division in Manitoba can ship the 30,000 containers at a variable cost of $2.50 per container and a full cost, based on practical capacity, of $4.00 per container.When the company's Manitoba shipping division ships for external customers is charges $6.00 per container.
-What is the daily operating advantage (disadvantage) of purchasing the water from the independent producer and using the company's Manitoba shipping department, assuming the shipping department is currently shipping 50,000 containers per day for external customers?

• A)$0
• B)$45,000
• C)$225,000
• D)$120,000
• E)$165,000

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Definitions:

Centralization

The degree to which the authority to make decisions is restricted to higher levels of management.

Higher Levels

Refers to the more advanced or senior ranks and responsibilities in an organizational hierarchy or in the context of thinking, it refers to more complex and abstract thought processes.

Policies, Rules

Established guidelines and instructions that dictate the expected conduct and procedures within an organization or society.

Direct Supervision

The act of overseeing employees' work directly, often with the supervisor physically present or in close proximity.