The Northern Division of Fiscar Corporation sells Part X2 to other companies for $87.20 per unit. According to the company's cost accounting system, the costs to Northern Division to make a unit of Part X2 are: The Southern Division of Fiscar Corporation uses a part much like Part X2 in one of its products. The Southern Division can buy this part from an outside supplier for $79.95 per unit. However, the Southern Division could use Part X2 instead of this part that it purchases from outside suppliers. What is the most that the Southern Division would be willing to pay the Northern Division for Part X2?
A) $87.20 per unit
B) $62.60 per unit
C) $58.10 per unit
D) $79.95 per unit

Question

The Northern Division of Fiscar Corporation sells Part X2 to other companies for $87.20 per unit. According to the company's cost accounting system, the costs to Northern Division to make a unit of Part X2 are:  The Southern Division of Fiscar Corporation uses a part much like Part X2 in one of its products. The Southern Division can buy this part from an outside supplier for $79.95 per unit. However, the Southern Division could use Part X2 instead of this part that it purchases from outside suppliers. What is the most that the Southern Division would be willing to pay the Northern Division for Part X2?
A) $87.20 per unit 
B) $62.60 per unit 
C) $58.10 per unit 
D) $79.95 per unit

Quizplus · Accepted Answer

The Southern Division would be willing to pay at most $79.95 for the part because it can buy this part from an outside supplier for $79.95.

The Northern Division of Fiscar Corporation Sells Part X2 to Other