The DVD Division of Sound Company makes and sells compact DVD players (DVDP) that it presently sells to outside customers. Budgeted costs next month for the DVD Division are as follows:

MaxiSound, another division of Sound Company, would like to buy 1,000 of the DVDPs from the DVD Division. An outside supplier has offered to sell similar DVDPs to MaxiSound for $170 each.

-Assume that DVD Division's monthly production capacity is 2,800 units. If the DVD Division sells 1,000 DVDPs to MaxiSound for $170 each, the monthly effect on the profits of DVD Division will be a:
A)$15,000 decrease
B)$42,000 decrease
C)$50,000 increase
D)no change

Question

The DVD Division of Sound Company makes and sells compact DVD players (DVDP) that it presently sells to outside customers. Budgeted costs next month for the DVD Division are as follows:

MaxiSound, another division of Sound Company, would like to buy 1,000 of the DVDPs from the DVD Division. An outside supplier has offered to sell similar DVDPs to MaxiSound for $170 each.

-Assume that DVD Division's monthly production capacity is 2,800 units. If the DVD Division sells 1,000 DVDPs to MaxiSound for $170 each, the monthly effect on the profits of DVD Division will be a:
A)$15,000 decrease 
B)$42,000 decrease 
C)$50,000 increase 
D)no change

Quizplus · Accepted Answer

The Answer of The DVD Division of Sound Company makes and sells compact DVD players (DVDP) that it presently sells to outside customers. Budgeted costs next month for the DVD Division are as follows:

MaxiSound, another division of Sound Company, would like to buy 1,000 of the DVDPs from the DVD Division. An outside supplier has offered to sell similar DVDPs to MaxiSound for $170 each.

-Assume that DVD Division's monthly production capacity is 2,800 units. If the DVD Division sells 1,000 DVDPs to MaxiSound for $170 each, the monthly effect on the profits of DVD Division will be a:
A)$15,000 decrease 
B)$42,000 decrease 
C)$50,000 increase 
D)no change

The DVD Division of Sound Company Makes and Sells Compact