Suppose Division X Has Ample Excess Capacity to Handle All

question 13

Multiple Choice

Suppose Division X has ample excess capacity to handle all of Division Y's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division X refuses to accept the $17 price internally and Division Y continues to buy from the outside supplier, the company as a whole will be:

• A)worse off by $70,000 each period.
• B)better off by $10,000 each period.
• C)worse off by $60,000 each period.
• D)worse off by $20,000 each perioD.Instead of incurring a cost of $11 per unit, the company would have to incur a cost of $17 per unit to purchase from an outside supplier.Therefore, the company would be worse off by $60,000 per period = ($17 per unit - $11 per unit) × 10,000 units per period

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Definitions:

Z-Score

A statistical measure that describes a score's relationship to the mean in a group of scores, typically used to understand how far a point is from the average in terms of standard deviations.

Z-Score

A numerical indicator that represents how a specific value compares to the average of a dataset, illustrated by the number of standard deviations it is from that average.

Z-Score

Represents how many standard deviations an element is from the mean, providing a way to compare data points across different scales.

Z-Scores

A measure indicating how many standard deviations an element is from the mean.