Infobytes Corporation Infobytes Corporation manufactures and sells various high-tech office automation products. Two divisions of Infobytes Corporation are the Computer Chip Division and the Computer Division. The Computer Chip Division manufactures one product, a "super chip," that can be used by both the Computer Division and other external customers. The following information is available on this month's operations in the Computer Chip Division:
Presently, the Computer Division purchases no chips from the Computer Chips Division, but instead pays $45 to an external supplier for the 4,000 chips it needs each month.
Refer to Infobytes Corporation. Two possible transfer prices (for 4,000 units) are under consideration by the two divisions: $35 and $40. Corporate profits would be ____ if $35 is selected as the transfer price rather than $40.
A) $20,000 larger
B) $40,000 larger
C) $20,000 smaller
D) the same

Question

Infobytes Corporation Infobytes Corporation manufactures and sells various high-tech office automation products. Two divisions of Infobytes Corporation are the Computer Chip Division and the Computer Division. The Computer Chip Division manufactures one product, a "super chip," that can be used by both the Computer Division and other external customers. The following information is available on this month's operations in the Computer Chip Division:
 Presently, the Computer Division purchases no chips from the Computer Chips Division, but instead pays $45 to an external supplier for the 4,000 chips it needs each month.
Refer to Infobytes Corporation. Two possible transfer prices (for 4,000 units) are under consideration by the two divisions: $35 and $40. Corporate profits would be ____ if $35 is selected as the transfer price rather than $40.
A) $20,000 larger 
B) $40,000 larger 
C) $20,000 smaller 
D) the same

Quizplus · Accepted Answer

The Answer of Infobytes Corporation Infobytes Corporation manufactures and sells various high-tech office automation products. Two divisions of Infobytes Corporation are the Computer Chip Division and the Computer Division. The Computer Chip Division manufactures one product, a "super chip," that can be used by both the Computer Division and other external customers. The following information is available on this month's operations in the Computer Chip Division:
 Presently, the Computer Division purchases no chips from the Computer Chips Division, but instead pays $45 to an external supplier for the 4,000 chips it needs each month.
Refer to Infobytes Corporation. Two possible transfer prices (for 4,000 units) are under consideration by the two divisions: $35 and $40. Corporate profits would be ____ if $35 is selected as the transfer price rather than $40.
A) $20,000 larger 
B) $40,000 larger 
C) $20,000 smaller 
D) the same

Infobytes Corporation Infobytes Corporation Manufactures and Sells Various High-Tech Office