The assembly division of SLOWCAR Company has offered to purchase 70,000 batterie
ID: 338287 • Letter: T
Question
The assembly division of SLOWCAR Company has offered to purchase 70,000 batteries from the Electrical Division (ED) for $110 per unit. The production cost per battery are $114.
The electrical division has been selling 300,000 batteries per year to outside buyers for $138 each. Capacity is 350,000 batteries/year. The Assembly Division has been buying batteries from outside suppliers for $128 each.
Should the Electrical Division manager accept the offer?
Will an internal transfer be of any benefit to the company?
Explanation / Answer
The assembly division of SLOWCAR Company has offered to purchase 70,000 batteries from the Electrical Division (ED) for $110 per unit. The production cost per battery are $114.
The electrical division has been selling 300,000 batteries per year to outside buyers for $138 each. Capacity is 350,000 batteries/year. The Assembly Division has been buying batteries from outside suppliers for $128 each.
Should the Electrical Division manager accept the offer?
Will an internal transfer be of any benefit to the company?
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