Question

QUESTIONS The Dubs division of Fast Company (the parent company produces whes for off road sporties. One sold to the Hoon division of Fast the remainder is sold to outside customers. Dub's med operating profit for the year is shown in the table Total Internal Sale $300,000 External Sales 5400.000 $160.000 Var Me Var GA 500.000 CM $100,000 $40.000 $100,000 $24.000 $36.000 $40.000 1.000 Fixed Mig 5700.000 $320,000 $100,000 $200,000 $56,000 $84.000 $140.000 2.000 $180,000 $32,000 $48.000 $100,000 Food GIA Op. Profe Unit Sales 1,000 Unless otherwise stated assume the fixed costs even above are located costs and unavoidable. Hoon division has an opportunity to purchase 1,000 wheels of the same quality from an outside supplier on a continuing basis for $250.00 per wheel What is the current operating profit per unit on wheels sold externally into the market?

Answer 1

Operating Profit for external sales is $100,000

Number of units sold to external customers is 1000.

So operating profit per unit sales for external customers is $100,000/1,000 = $100/Units