99.6k views
5 votes
The southern division of Pryto Corporation uses a part much like Part D in one of its products. The southern division can buy this part from an outside supplier for $78.25 per unit. However, the southern division could use Part D instead of this part that it purchases from outside suppliers. What's the most that the southern division would be willing to pay the western division for Product D

1 Answer

2 votes

Answer: $78.25

Step-by-step explanation:

The Southern Division is willing to pay $78.25 to an outside company for this part that it needs.

In the same vein, the maximum therefore that they would be willing to pay for the Western Division should be $78.25 as well because anything higher than that would constitute an Opportunity Cost loss.

They should go for the cheaper option and if buying from the Western Division exceeds the $78.25 then it is loss on their part. Western Division should charge the same or less.

User Thotep
by
8.9k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.