Sir what would be an answer for this type of question A firm has 2 divisions (A nd B )and uses full cost to transfer goods at internal division (B) and External sales. Internal transfer is at full cost of 28$/unit and external at 30$/unit. Divison B has got an opportunity to purchase the goods externally at 25$/unit. Varaible Cost is 20$ Without including 1.5$ saving on internal transfers. What would be the reduction in the group profit if Division B takes to purchase from external supplier 10,000 units?
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Sir what would be an answer for this type of question
A firm has 2 divisions (A nd B )and uses full cost to transfer goods at internal division (B) and External sales.
Internal transfer is at full cost of 28$/unit and external at 30$/unit.
Divison B has got an opportunity to purchase the goods externally at 25$/unit.
Varaible Cost is 20$ Without including 1.5$ saving on internal transfers.
What would be the reduction in the group profit if Division B takes to purchase from external supplier 10,000 units?
65,000?
Wouldn’t you need to know the selling price for b
50000$
as marginal cost of producing is 20 but we are buying it from externally for 25
So 5$ increase in cost per unit .
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This lecturer is sleepy & sleeping as well 👎
He probably forgot that you paid for it.