Division a Makes a Part with the Following Characteristics

question 6

Multiple Choice

Division A makes a part with the following characteristics:


Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $28 each.
-Suppose that Division A is operating at capacity and can sell all of its output to outside customers at its usual selling price. If Division A agrees to sell the parts to Division B at $28 per unit, the company as a whole will be:

• A)better off by $20,000 each period.
• B)worse off by $10,000 each period.
• C)worse off by $40,000 each period.
• D)There will be no change in the profits of the company as a whole.

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Definitions:

Increase Fluid Intake

A health recommendation to consume more liquids, often given to prevent or treat dehydration and support bodily functions.

Indwelling Catheter

A medical device that is inserted into a body cavity, duct, or vessel and left in place to administer medication or drain fluid.

Radiology Department

A specialized department within a hospital or clinic that utilizes medical imaging techniques, such as X-rays, MRIs, and CT scans, to diagnose and treat diseases.

Drainage Bag

A medical device used to collect fluid that drains from a patient’s body, often attached to catheters or tubes.