accounting-The Van Division of MotoCar Corporation
Van Division of MotoCar Corporation has offered to purchase 180,000 wheels
from the Wheel Division for $41 per wheel. At a normal volume of 500,000
wheels per year, production costs per wheel for the Wheel Division are as
Wheel Division has been selling 500,000 wheels per year to outside buyers at
$58 each. Capacity is 700,000 wheels per year. The Van Division has been
buying wheels from outside suppliers at $56 per wheel.
Calculate the net benefit (or cost) to the Wheel Division of accepting the
offer from the Van Division.
Calculate the net benefit (or cost) to Motocar Corp. if the Wheel Division
accepts the offer from the Van Division.
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