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Bpp kit ques 340
Portable garage co (m/j 18)
Part aWhile making profit statement of division b what I did is the maximum demand is 180000 and they can only get 150000 from division a , so I took the difference that is 30000 to be taken from the external market at the same price since it is written in the below paragraph and I calculated revenue upon 180000 and cost as well on 180000 but in the answer they are only taking 150000 units that are being transferred from division a. since it is clearly mentioned that they can get only 150000 from division a , therefore it is self understandable that to meet maximum demand they can get remaining 30000 from external market exactly at same price.
But in answer they have only taken and calculated everything upon 150000 units. I am unable to understand why & where is my logic wrong.
Thank youFor part a, the question says that currently Division B is only allowed to purchase from Division A (they are not allowed to buy externally).
Given that Division A will only supply 150,000 is means that Division B can only buy 150,000 and therefore only sell 150,000. They would prefer to get 180,000 but they are not allowed to buy the extra externally.Got it, thanks
For part c
Opportunity cost for selling to division b should be 15-7=8
So total minimum tp should be
(7-1)+8=14 . Is that right since I am unable to understand what they did.
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