Given the Following Data for Handle Division Cabinet Division Would Like to Purchase 10,000 Units from the l

question 106

Multiple Choice

Given the following data for Handle Division:
$$\begin{array} { | l | r | } \hline \text { Selling price to outside customers } & \$ 150 \\\hline \text { Variable cost per unit } & 80 \\\hline \text { Fixed cost per unit (based on capacity) } & 30 \\\hline \text { Capacity (in units) } & 50,000 \\\hline\end{array}$$ Cabinet Division would like to purchase 10,000 units from the Handle Division at a price of $125 per unit.Handle Division has no excess capacity to handle the Cabinet Division's requirements.The Cabinet Division currently purchases from an outside supplier at a price of $140.If the Handle Division accepts a $125 price internally,the company,as a whole,will be better or worse off by:

• A) $600,000
• B) $(100,000)
• C) $115,000
• D) $250,000

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Definitions:

Substantive Unconscionability

Unconscionability that derives from contract terms that are so one-sided, unjust, or overly harsh that the contract should not be enforced.

Unconscionable

Describes terms or agreements that are so unfair to one party that no reasonable or informed person would agree to them.

Life Insurance

A contract between an insurer and a policyholder that pays a designated beneficiary a sum of money upon the death of the insured person.

Necessary

Something essential or required in a particular situation, often used to describe conditions or actions needed to achieve a specific result.