Connect 12 Suppose Division X x Secure I https Exam 2224 P

Connect , \\ 12 Suppose Division X x Secure I https/ Exam 22-24 Pre-Test Help Save&Exit; Subm 6 Division X makes a part with the following characteristics Production capacity points 27,500 units Swooes Variable cost per unit $23 16 $182,500 Fixed cost, total RerferencesDivision Y of the same company would like to purchase 10.025 units each period from Division X Division Y now purchases the part from an outside supplier at a price of $22 each. Suppose Division X ha increase in fixed costs and without cutting into sales to outside customers IfDivision X refuses to accept the $22 price internaty and Division Y continues to buy from the outside supplier, the company as a whole will be: s ample excess capacity to handle all of Division Y\'s n needs without any Multiple Choice pe here to searcih oe enovo

Solution

worse off by $60,150 each period.

Instead of incurring a cost of $16 per unit, the company would have to incur a cost of $22 per unit to purchase from an outside supplier. Therefore, the company would be worse off by $60,150 per period = ($22 per unit - $16 per unit) × 10,025 units per period.