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Should the Micro Division meet the outside price

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1. If a company has a plant in a high tax jurisdiction that produces products for a facility in a low tax jurisdiction – suggest a strategy that will result in the lowest tax for the overall corporation. 2. The Micro Division of Silicon Computers produces computer chips that are sold to the Personal Computer Division and to outsiders. Operating data for the Micro Division for 20×3 are as follows: Internal Sales External Sales Sales: 300,000 chips at $10 $3,000,000 200,000 chips at $12 $2,400,000 Variable expenses at $4 1,200,000 800,000 Contribution margin $1,800,000 $1,600,000 Fixed cost (allocated in units) 1,500,000 1,000,000 Operating income $ 300,000 $ 600,000 The Personal Computer Division has just received an offer from an outside supplier to furnish chips at $8.60 each. The manager of Micro Division is not willing to meet the $8.60 price. She argues that it costs her $9.00 to produce and sell each chip. Sales to outside customers are at a maximum of 200,000 chips. Required: a. Verify the Micro Division’s $9.00 unit cost figure. b. Should the Micro Division meet the outside price of $8.60? Explain. c. Could the $8.60 price be met and still show a profit for the Micro Division sales to the Personal Computer Division? Show computations. Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help

Should the Micro Division meet the outside price

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