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Posted: October 8th, 2022
Tiffany Company has two divisions, Gold and Silver. Gold produces
Tiffany Company has two divisions, Gold and Silver. Gold produces a unit that Silver could use in itsproduction. Silver currently is purchasing 50,000 units from an outside supplier for $25. Gold isoperating at less than full capacity and has variable costs of $13.50 per unit. The full cost tomanufacture the unit is$20. Gold currently sells 450,000 units at a selling price of $27. If an internal transfer is made, variableshipping and administrative costs of $1 per unit could be avoided. If the internal transfer is made, whatwould be the impact on Tiffany Company's overall profits?A.$625,000 increaseB.$1,125,000 increaseC.$225,000 decreaseD.No change in profits
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