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Dmitriy789 [7]
3 years ago
14

Advances in technology have reduced the cost of manufacturing MP3 players if demand does not change

Business
1 answer:
Andrews [41]3 years ago
5 0
Because MP3 players cost less to make, if demand does not change, there will be more profit. This is because there would be the same amount demand and less money being made into making the product, meaning less expense, which means a bigger profit.
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Answer:

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Since the variable cost per part is only $18 and Division 1  sells to Division 2 at $25, it is in the company's overall interest that business should continue between the two divisions.

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Fixed costs are not relevant in making a decision of this nature.  The costs would be incurred irrespective of the decision made.  They are therefore irrelevant.  The relevant cost is the variable cost of $18 per unit.  It should be the focus of the decision, including the possibility of excess capacity for Division 1.

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