Question

The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold
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Answer #1

Ans 1

Yes

Reason:-

SP = 30

Variable cost = 23

Contribution = $7 per unit

Since there is excess capacity, therefore, it is profitable to accept the proposal.

Ans 2

Effect on Molding division net income, if the proposal is accepted

Net Income = 7*19000 = $133,000

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