The wheel division has been selling 500000 wheels per year

Reference no: EM13600931

The Van division of MotorCar Corporation has offered to purchase 180,000 wheels from the Wheel division for $42 per wheel. At a normal volume of 5000,000 wheels per year, production costs per wheel for the Wheel Division are as follows:

Direct materals...........$15
Direct labor................10
Variable overhead.........6
Fixedoverhead..............18
Total............................$49

The wheel division has been selling 500,000 wheels per year to outside buyers at $58 each. Capacity is 700,000 wheels per year. The Van Division has been buying wheels from outside suppliers at $55 per wheel.

A. Should the Wheel Division manager accept the offer? Show computations/work.
b. From the standpoint of the company, will the internal sale be beneficial?

Reference no: EM13600931

Questions Cloud

Here are 2 hypothetical examples of manufacturing : here are 2 hypothetical examples of manufacturing companiesltbr gt1. williams watches builds fine watches by hand sell

Snow devil company is evaluating a capital expenditure : snow devil company is evaluating a capital expenditure proposal that requires an intial investment of 32312 has

What is the return on assets for a research in motion and b : key comparative figures millions for both research in motion and apple follows.key figure research in motion

Koji cameras inc has a disposables division that produces a : koji cameras inc. has a disposables division that produces a camera that sells for 10 per unit in the open market. the

The wheel division has been selling 500000 wheels per year : the van division of motorcar corporation has offered to purchase 180000 wheels from the wheel division for 42 per

The southwest management assiciation held its annual public : the southwest management assiciation held its annual public relations luncheon in april 2010. based on the previous

Calcor company has been a wholesale distributor of : calcor company has been a wholesale distributor of automobile parts for domestic automakers for 20 years. calcor has

Flyer company sells a product in a competitive marketplace : flyer company sells a product in a competitive marketplace. market analysis indicates that their product would probably

Avey corporation had 275000 in invested assets sales of : avey corporation had 275000 in invested assets sales of 330000 income from operations amounting to 49500 and a desired

User Account

All Pages