MVS, Inc. produces cleaning equipment, and operates several divisions. Division A produces a product that it sells to other companies for $25 per unit. It is currently operating at full capacity of 60,000 units per year. Variable manufacturing cost is $13 per unit, and variable marketing cost is $3 per unit.
The company wishes to create a new division, Division B, to produce an innovative new tool that requires the use of Division A's product (or one very similar). Division B will produce 20,000 units. Division B can purchase a product equivalent to Division A's from Company X for $18 per unit. However, MVS, Inc. is considering having Division A supply Division B with the product.
If Division A supplies Division B, the transfer price would be $16 and there would be no marketing costs associated with the units.
Required:
a) From Division A's perspective the net benefit (cost) is .

For each example identify the most appropriate ctso

Ann chovies, owner of the perfect pasta pizza parlor, uses 20 pounds of pepperoni each day in preparing pizzas. order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. if she were to order 80 pounds of pepperoni at a time, what would be the average inventory level?

The gilbert instrument corporation is considering replacing the wood steamer it currently uses to shape guitar sides. the steamer has 6 years of remaining life. if kept, the steamer will have depreciaiton expenses of $650 for five years and $325 for the sixthyear. its current book value is $3,575, and it can be sold on an internet auction site for$4,150 at this time. if the old steamer is not replaced, it can be sold for $800 at the endof its useful life. gilbert is considering purchasing the side steamer 3000, a higher-end steamer, whichcosts $12,000 and has an estimated useful life of 6 years with an estimated salvage value of$1,500. this steamer falls into the macrs 5-year class, so the applicable depreciationrates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. the new steamer is fasterand allows for an output expansion, so sales would rise by $2,000 per year; the newmachine's much greater efficiency would reduce operating expenses by $1,900 per year. to support the greater sales, the new machine would require that inventories increase by$2,900, but accounts payable would simultaneously increase by $700. gilbert's marginalfederal-plus-state tax rate is 40%, and its wacc is 15%.a. should it replace the old steamer? b. npv of replace = $2,083.51