Thornton Company has two divisions, A and B. Division A manufactures 5,900 units of product...
80.2K
Verified Solution
Link Copied!
Question
Accounting
Thornton Company has two divisions, A and B. Division A manufactures 5,900 units of product per month. The cost per unit is calculated as follows. Variable costs Fixed costs Total cost $ 7.90 20.90 $28.80 Division B uses the product created by Division A. No outside market for Division A's product exists. The fixed costs incurred by Division A are allocated headquarters-level facility-sustaining costs. The manager of Division A suggests that the product be transferred to Division B at a price of at least $28.80 per unit. The manager of Division B argues that the same product can be purchased from another company for $19.50 per unit and requests permission to do so. Required a-1. How much would the division gain or lose if Division B were to purchase the product from the outside company for $19.50 per unit? (Round your answer to 2 decimal places.) a-2. Is it in the best interest of Thornton Company for Division B to purchase the product from an outside company? per unit a-1. Division's gain or loss a-2. Should Thornton purchase the product from outside
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
