Required information
[The following information applies to the questions displayed below.]
Truball Inc., which manufactures sports equipment, consists of several operating divisions. Division A has decided to go outside the company to buy materials since division B plans to increase its selling price for the same materials to $200. Information for division A and division B follows:
Outside price for materials | $150 | ||
Division A’s annual purchases | 10,000 | units | |
Division B’s variable costs per unit | $140 | ||
Division B’s fixed costs, per year | $ | 1,250,000 | |
Division B’s capacity utilization | 100 | % | |
Required:
1-a. Assume that division B can sell 10,000 units outside the company for $215 per unit with variable marketing costs of $10. What will be the net benefit/cost to the firm as a whole if Division B sells outside? (Enter all the amounts as positive value.)
Answer:
Net benefit/cost to the firm as a whole if Division B sells outside | |
Amount($) | |
Revenue for Division B(10000*215) | 21,50,000 |
Less: | |
variable cost(10000*140) | 14,00,000 |
Variable marketing costs (10000*10) | 1,00,000 |
6,50,000 | |
Less: Excess price paid Div A to outsider supplier | |
(10000 unit*$10) | 1,00,000 |
Net benefit/cost | 5,50,000 |
*150-140=$10 |
Required information [The following information applies to the questions displayed below.] Truball Inc., which manufactures sports...
Truball Inc., which manufactures sports equipment, consists of several operating divisions. Division A has decided to go outside the company to buy materials since division B plans to increase its selling price for the same materials to $200. Information for division A and division B follows: Outside price for materials $180 Division A’s annual purchases 13,000 units Division B’s variable costs per unit $170 Division B’s fixed costs, per year $ 1,310,000 Division B’s capacity utilization 100 % Required: 1....
Truball Inc., which manufactures sports equipment, consists of several operating divisions. Division A has decided to go outside the company to buy materials since division B plans to increase its selling price for the same materials to $200. Information for division A and division B follows: Outside price for materials $160 Division A’s annual purchases 11,000 units Division B’s variable costs per unit $150 Division B’s fixed costs, per year $ 1,270,000 Division B’s capacity utilization 100 % Required: 1....
Truball Inc., which manufactures sports equipment, consists of several operating divisions. Division A has decided to go outside the company to buy materials since division B plans to increase its selling price for the same materials to $200. Information for division A and division B follows: Outside price for materials $120 Division A’s annual purchases 7,000 units Division B’s variable costs per unit $110 Division B’s fixed costs, per year $ 1,190,000 Division B’s capacity utilization 100 % Required: 1....
Truball Inc., which manufactures sports equipment, consists of several operating divisions. Division A has decided to go outside the company to buy materials since division B plans to increase its selling price for the same materials to $200. Information for division A and division B follows: Outside price for materials $125 Division A’s annual purchases 7,500 units Division B’s variable costs per unit $115 Division B’s fixed costs, per year $ 1,200,000 Division B’s capacity utilization 100 % Required: 1....
Truball Inc., which manufactures sports equipment, consists of several operating divisions. Division A has decided to go outside the company to buy materials since division B plans to increase its selling price for the same materials to $200. Information for division A and division B follows: Outside price for materials $185 Division A’s annual purchases 13,500 units Division B’s variable costs per unit $175 Division B’s fixed costs, per year $ 1,320,000 Division B’s capacity utilization 100 % Required: 1....
Truball Inc., which manufactures sports equipment, consists of several operating divisions. Division A has decided to go outside the company to buy materials since division B plans to increase its selling price for the same materials to $200. Information for division A and division B follows: Outside price for materials Division A's annual purchases Division B's variable costs per unit Division B's fixed costs, per year Division B's capacity utilization $170 12,000 units $160 $1,290,000 100% Required: 1. Assume that...
Truball Inc., which manufactures sports equipment, consists of several operating divisions. Division A has decided to go outside the company to buy materials since division B plans to increase its selling price for the same materials to $200. Information for division A and division B follows: Outside price for materials Division A's annual purchases Division B's variable costs per unit Division B's fixed costs, per year Division B's capacity utilization $100 5,000 units $90 $1,150,000 100% Required: 1. Assume that...
Truball Inc., which manufactures sports equipment, consists of several operating divisions. Division A has decided to go outside the company to buy materials since division B plans to increase its selling price for the same materials to $200. Information for division A and division B follows: Outside price for materials Division A's annual purchases Division B's variable costs per unit $100 5,000 units $90 Division B's fixed costs, per year $1,150,000 Division B's capacity utilization 1008 Required: 1. Assume that...
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Phoenix Inc., a cellular communication company, has multiple business units, organized as divisions. Each division’s management is compensated based on the division’s operating income. Division A currently purchases cellular equipment from outside markets and uses it to produce communication systems. Division B produces similar cellular equipment that it sells to outside customers—but not to division A at this time. Division A’s manager approaches division B’s manager with a proposal to buy the equipment from division B. If it produces the...