Chipper Division of Acme Corp

question 77

Multiple Choice

Chipper Division of Acme Corp.sells 80,000 units of part Z-25 to the outside market.Part Z-25 sells for $40,has a variable cost of $22,and a fixed cost per unit of $10.Chipper has a capacity to produce 100,000 units per period.Jones Division currently purchases 10,000 units of part Z-25 from Chipper for $40.Jones has been approached by an outside supplier willing to supply the parts for $36.What is the effect on Acme's overall profit if Chipper REFUSES the outside price and Jones decides to buy outside?

• A)No change.
• B)$140,000 decrease in Acme profits.
• C)$80,000 decrease in Acme profits.
• D)$40,000 increase in Acme profits.

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Definitions:

NSF Check

A check that a bank returns without honoring because the account on which it was drawn does not have sufficient funds.

Bank Reconciliation

The process of matching and comparing a company's financial records with those of its bank statements to ensure consistency and accuracy.

Bad Check

A check that cannot be processed because the issuer has insufficient funds or the account is closed.

Bank Customers

Individuals or entities that utilize the services provided by a bank, such as saving accounts, loans, and investment advice.