Division X Makes a Part with the Following Characteristics Division Y of the Same Company Would Like to Purchase

question 30

Multiple Choice

Division X makes a part with the following characteristics: $\begin{array}{lrr} \text { Production capacity. } &\text {25,000 units}\\ \text { Selling price to outside customers. } &£ 18\\ \text { Variable cost per unit.} &11\\ \text { Fixed cost, total. } &£ 100,000\\ \end{array}$

Division Y of the same company would like to purchase 10,000 units each period from Division X. Division Y now purchases the part from an outside supplier at a price of £17 each.
- Suppose that Division X is operating at capacity and can sell all of its output to outside customers. If Division X sells the parts to Division Y at £17 per unit, the company as a whole will be

• A)better off by £10,000 each period
• B)worse off by £20,000 each period
• C)worse off by £10,000 each period
• D)there will be no change in the status of the company as a whole

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Definitions:

Glass Ceilings

Invisible barriers that prevent certain groups, often women and minorities, from rising beyond a certain level in various hierarchical organizations.

AAP Awareness

Awareness regarding Affirmative Action Programs designed to promote equal opportunity in employment.

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A database or record of the skills, talents, and capabilities of all employees in an organization, used for planning, selection, and developmental purposes.

Recruiting Sources

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