Altoona Corporation has two divisions,Hinges and Doors,which are both organized as profit centers;the Hinge Division produces and sells hinges to the Door Division and to outside customers.The Hinge Division has total costs of $35,$20 of which are variable.The Hinge Division is operating significantly below capacity and sells the hinges for $50.The Door Division has received an offer from an outsider vendor to supply all the hinges it needs (20,000 hinges) at a cost of $45.The manager of the Door Division is considering the offer but wants to approach the Hinge Division first.What would be the profit impact to Altoona Corporation as a whole if the Door Division purchased the 20,000 hinges it needs from the outside vendor for $45?
A) No change in profit to Altoona.
B) $100,000 increase in profits.
C) $100,000 decrease in profits.
D) $500,000 decrease in profits.
Correct Answer:
Verified
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