Lock division refuses outside price and cabinet division

Assignment Help Financial Accounting
Reference no: EM131215660

Lock Division of Morgantown Corp. sells 80,000 units of part Z-25 to the outside market. Part Z-25 sells for $40, has a variable cost of $22, and a fixed cost per unit of $10. The Lock Division has a capacity to produce 100,000 units per period. The Cabinet Division currently purchases 10,000 units of part Z-25 from the Lock Division for $40. The Cabinet Division has been approached by an outside supplier willing to supply the parts for $36. What is the effect on Morgantown's overall profit if the Lock Division refuses the outside price and the Cabinet Division decides to buy outside?

No change in Morgantown's profits.

$40,000 increase in Morgantown's profits.

$140,000 decrease in Morgantown's profits.

$80,000 decrease in Morgantown's profits.

Reference no: EM131215660

Questions Cloud

Direct materials price and quantity variances : Topper Toys has developed a new toy called the Brainbuster. The company has a standard cost system to help control costs and has established the following standards for the Brainbuster toy: Compute the following variances for August. Direct materials..
Regarding ethical issues accompanying budgeting : Which of the following statements is true regarding ethical issues accompanying budgeting?
Debt service fund for the years : The City of Spartan's fiscal year ends on December 31. On October 1, 2017, the city issued $1,000,000 of 6%, 10-year term bonds with semi-annual interest payments due on March 1 and October 1 each year, beginning on April 1, 2018. What amount of expe..
Lock division refuses outside price and cabinet division : Lock Division of Morgantown Corp. sells 80,000 units of part Z-25 to the outside market. Part Z-25 sells for $40, has a variable cost of $22, and a fixed cost per unit of $10. The Lock Division has a capacity to produce 100,000 units per period. What..
Describe instances where cash based transactions : Without incriminating yourself, please describe instances where "Cash Based" transactions could happen in our local economy or even nationally. Then offer a suggestion for the government, if one is available but if not justify why not, to capture tax..
Use compressed adjusted present value model : Assume that firms U and L are in the same risk class, and that both have EBIT = $500,000. Firm U uses no debt financing, and its cost of equity is rsU = 14%. Firm L has $1 million of debt outstanding at a cost of rd = 8%. There are no taxes. Assume t..
Find the internal rate of return promised by the new machine : Wendell’s Donut Shoppe is investigating the purchase of a new $52,100 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $6,100 per year. what would the total annual cash..
Annual statements for the use of management : Federal income tax returns of an officer of the corporation to determine whether he or she has included all taxable income in his or her return. Financial statements for use by stockholders when there is an internal audit staff. A bond indenture agre..

Reviews

Write a Review

Financial Accounting Questions & Answers

  What would be the annual ordering cost

Tom Wassink's irrigation shop uses 3,500 sprinkler heads during the course of a year, and this usage is relatively constant throughout the year. These sprinkler heads are purchased from a supplier 100 miles away for $9.50 each, and the lead time is 3..

  Debit or a credit to increase each of the accounts

The first assignment asks you to classify a set of accounts into one of the A L W I R E categories. Only after you have made that determination can you go on to the second assignment and answer the question as to whether to use a Debit or a Credit to..

  The business uses the following specialised journals

The business uses the following specialised journals to record its business transactions,  The business uses a general ledger, an accounts receivable subsidiary ledger and an accounts payable subsidiary ledger. The 4 column running balance  form of l..

  How a manager uses financial futures to protect a portfolio

In each of the following cases, discuss how you, as a portfolio manager, could use financial futures to protect a portfolio. You own a large position in a relatively illiquid bond that you want to sell. You have a large gain on one of your long Treas..

  Compute the balance in the cash account

Compute the balance in the Cash account at the end of March and What are the total assets of Fieldstone, Inc. at the end of March

  Elucidate how each amount in flexible budget was calculated

Elucidate how each amount in the flexible budget was calculated: If static budget has 1200 surgeries, $2400 patient revenue, 1200 salary expense, 600 non salary expense and profit is $600.

  Compute the net increase or decrease in cash flow

Determine the net impact on Mosby's 2008 income as a result of this fair value hedge of a firm commitment Compute the net increase or decrease in cash flow from having bought the foreign currency option to hedge this exposure to foreign exchange ri..

  Identify an internal control method

Information technology can greatly enhance the processing of transactions and distribution of output from AIS. For the Revenue, Expenditure, and Human Resources / Payroll cycles, identify at least three specific ways (tools) that information technolo..

  What amount of goodwill was recorded by anton company

Anton Company acquired the net assets of Hair Company on January 1, 20X1, for $600,000. What amount of goodwill was recorded by Anton Company when it acquired Hair Company?

  What is the adjected present value

A project has a one year life. It has an outlay of $1500 million. At the end of year 1, the new inflow is likely to be $2200 million. The pretax cost of debt is 11%, the cost of equity is 19% and the tax rate is 25%. Find the base case NPV? If the fi..

  Record the entry for the warranty work provided in february

Record the adjusting entry required at January 31, the end of the first month of the current year, to record the accrued product warranty. Record the entry for the warranty work provided in February.

  Calculate basic and diluted earnings per share

XYZ Company had 200,000 shares of common stock outstanding on December 31, 2008. On July 1, 2009, XYZ issued an additional 50,000 shares for cash. On January 1, 2009, XYZ issued 20,000 shares of convertible preferred stock.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd