Business, 05.05.2020 16:43 Mikey3414

The Lock Division of Morgantown Corporation sells 88,000 units of part Z-25 to the outside market. Part Z-25 sells for $48, has a variable cost of $30, and a fixed cost per unit of $18. The Lock Division has a capacity to produce 120,000 units per period. The Cabinet Division currently purchases 18,000 units of part Z-25 from the Lock Division for $48. The Cabinet Division has been approached by an outside supplier willing to supply the parts for $44. What is the effect on Morgantown's overall profit if the Lock Division agrees to sell to the Cabinet Division at the outside supplier’s price and the Cabinet Division continues to buy inside?

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The Lock Division of Morgantown Corporation sells 88,000 units of part Z-25 to the outside market. P...

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