Division X Makes a Part with the Following Characteristics

question 31

Multiple Choice

Division X makes a part with the following characteristics: 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 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.
• E) better off by $60,000 each period.

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Definitions:

African Religions

Traditional religions practiced in various parts of Africa, often characterized by belief in a supreme being, ancestral worship, and spirituality connected to nature.

Middle Passage

The sea voyage that transported enslaved Africans across the Atlantic Ocean to the Americas as part of the triangular trade.

Slave Labor

A form of forced labor where individuals are owned by others, deprived of personal freedom, and compelled to perform work or services without consent.

Emerging Society

A society that is in the process of significant social, economic, or political change.