Broome, Inc. produces cleaning equipment, and operates several divisions. Division A produces a product it...
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Broome, Inc. produces cleaning equipment, and operates several divisions. Division A produces a product it sells to other companies for $18 per unit. It is currently operating at full capacity of 45,000 units per year. Variable manufacturing cost is $11 per unit, and variable marketing cost is $3 per unit. The company wishes to create a new division, Division B, to produce an innovative new tool that requires the use of Division A's product (or one very similar). Division B will produce 30,000 units. Division B can purchase a product equivalent to Division A's from Company X for $16 per unit. However, Broome, Inc. is considering having Division A supply Division B with the product. If Division A supplies Division B, the transfer price would be $14 and there would be no marketing costs associated with the units. Problem 2.3 From Broome, Inc.'s perspective the net benefit (cost) is? O Net benefit of $60,000. Net benefit of $30,000. O Net cost of $30,000. O Net cost of $60,000
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