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ashly138 ashly138
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7 years ago
The Assembly Division of Canadian Car Company has offered to purchase 90,000 batteries from the Electrical Division for $104 per unit. At a normal volume of 250,000 batteries per year, production costs per battery are as follows:

Direct materials   $40
Direct manufacturing labour   20
Variable factory overhead   12
Fixed factory overhead     40
Total   $112

The Electrical Division has been selling 250,000 batteries per year to outside buyers at $136 each. Capacity is 350,000 batteries per year. The Assembly Division has been buying batteries from outside sources for $130 each.

Required:
a.   Should the Electrical Division manager accept the offer as is, make a counter offer, or reject the offer? Explain.
b.   From the company's perspective, will the internal sales be of any benefit? Explain
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
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btpsandbtpsand
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ashly138 Author
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7 years ago
This site is awesome
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I appreciate what you did here, answered it right Smiling Face with Open Mouth
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this is exactly what I needed
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