Use the following information for the next 2 questions.
The National Division of Roboto Company is buying 10,000 widgets from an outside supplier at $30 per unit. Roboto's Overseas Division, which is producing and selling at full capacity (12,000 units), has the following sales and cost structure:
-If the Overseas Division meets the outside supplier's price and sells the 10,000 widgets to National, the effect on overall company profits will be
A) $ 75,000 higher
B) $150,000 lower
C) $300,000 higher
D) $225.000 lower

Question

Use the following information for the next 2 questions.
The National Division of Roboto Company is buying 10,000 widgets from an outside supplier at $30 per unit. Roboto's Overseas Division, which is producing and selling at full capacity (12,000 units), has the following sales and cost structure: 
-If the Overseas Division meets the outside supplier's price and sells the 10,000 widgets to National, the effect on overall company profits will be
A) $ 75,000 higher 
B) $150,000 lower 
C) $300,000 higher 
D) $225.000 lower

Quizplus · Accepted Answer

The Overseas Division would lose $150,000 if it sold the widgets to National at the outside supplier's price.

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