| Division A |
| | Current Situation | | | Proposal |
| | No. of Units | Purchase Price | Total Purchases | No. of Units | Purchase Price | Total Purchases |
| Internal purchases | 3000 | 1000 | $ 3,000,000.00 | 2000 | 1000 | $ 2,000,000.00 |
| External purchases | 1000 | 900 | $ 900,000.00 | 2000 | 900 | $ 1,800,000.00 |
| Total cost for part 101 | | | | | | $ 3,800,000.00 |
| Savings to Div. A | | | | | | $ (3,800,000.00) |
| Division B |
| | Current situation | | | Proposal |
| | No. of Units | Purchase Price | Total Purchases | No. of Units | Purchase Price | Total Purchases |
| Internal purchases | 1000 | 2000 | $ 2,000,000.00 | 500 | 2000 | $ 1,000,000.00 |
| External purchases | 500 | 1900 | $ 950,000.00 | 1000 | 1900 | $ 1,900,000.00 |
| Total cost for part 201 | | | $ 2,950,000.00 | | | $ 2,900,000.00 |
| Savings to Div. B | | | | | | $ 50,000.00 |
| Division C |
| | Current situation | | | Propasal |
| | No. of units | Transfer profit | Total | No. of units | Transfer profit | Total |
| part 101 | 3000 | 300 | $ 900,000.00 | 2000 | 300 | $ 600,000.00 |
| Part 201 | 1000 | 800 | $ 800,000.00 | 500 | 800 | $ 400,000.00 |
| total profit for C | | | $ 1,700,000.00 | | | $ 1,000,000.00 |
| Reduction in profits | | | | | | $ 700,000.00 |
| Financial effect for each department and the company |
| Savings to dipartment A | | | $ (3,800,000.00) |
| Savings to dipartment B | | | $ 50,000.00 |
| Total Savings | | | $ (3,750,000.00) |
| Reduction in Department C profits | | | $ 700,000.00 |
| overall reduction in profitability | | | $ 4,450,000.00 |
Jacksongn
module_3_slp_finance.xlsx
