High Division sells a part internally to Low Division. Low Division uses the part to produce inexpensive products sold at discount stores. High Division incurs costs of $1.50 per part, while Low Division incurs additional costs of $4.80 per product
High Division sells the part to Low Division for $2.00 per part.
Low Division can purchase the part from an outside supplier for $1.00 per part, but does not accept the offer. The final product is sold to external customers for $8.00 each. Which of the following formulas correctly reflects the company's operating income?
A) $8.00 - $1.50 - $4.80 - $2.00 - $1.00 = $(1.30)
B) $8.00 - $1.50 - $4.80 = $1.70
C) $8.00 - $4.80 - $2.00 = $1.20
D) $8.00 - $1.50 = $6.50
B
You might also like to view...
If disposal of a plant asset occurs at any time during the year,_______________ for the fraction of the year to the date of disposal must be recorded.
Fill in the blank(s) with the appropriate word(s).
The four basic financial statements are the ________
A) income statement, balance sheet, statement of changes in shareholders' equity, and cash budget B) income statement, balance sheet, cash budget, and statement of cash flows C) income statement, balance sheet, statement of changes in shareholders' equity, and statement of cash flows D) balance sheet, shareholders' equity, statement of cash flows, and cash budget