(Appendix 12A)Division T of Clocker Company Makes a Timer Which

question 13

Multiple Choice

(Appendix 12A) Division T of Clocker Company makes a timer which it sells for $30 to outside customers.The division has supplied the following data concerning the timer: Division S of Clocker Company is currently buying 5, 000 similar timers each month from an overseas supplier at $27 each.Division S would like to acquire its timers from Division T if the price is right. Suppose Division T is operating at capacity and can sell all of the timers it produces to outside customers at its usual selling price.If Division T meets the price of the overseas supplier and sells 5, 000 timers to Division S each month, the effect on the monthly net operating income of the company as a whole will be:

• A)increase of $15, 000
• B)decrease of $15, 000
• C)decrease of $60, 000
• D)increase of $10, 000

---

Definitions:

Rent

Payment made periodically by a lessee to a lessor for the use of premises or other property.

Intangibility

A characteristic of services that implies they cannot be seen, touched, or physically measured.

Evaluating Services

The process of assessing the quality, effectiveness, and satisfaction of services provided to customers.

Difficulty

The level of challenge or effort required to complete a task or overcome a problem.