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. If a transfer between the two divisions is arranged next period at a price (on 4,000 units of super chips) of $40, total profits in the Computer Chip division will
A) rise by $20,000 compared to the prior period.
B) drop by $40,000 compared to the prior period.
C) drop by $20,000 compared to the prior period.
D) rise by $80,000 compared to the prior period.

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. If a transfer between the two divisions is arranged next period at a price (on 4,000 units of super chips) of $40, total profits in the Computer Chip division will
A) rise by $20,000 compared to the prior period. 
B) drop by $40,000 compared to the prior period. 
C) drop by $20,000 compared to the prior period. 
D) rise by $80,000 compared to the prior period.

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. If a transfer between the two divisions is arranged next period at a price (on 4,000 units of super chips) of $40, total profits in the Computer Chip division will
A) rise by $20,000 compared to the prior period. 
B) drop by $40,000 compared to the prior period. 
C) drop by $20,000 compared to the prior period. 
D) rise by $80,000 compared to the prior period.

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