Answer:
Division A
If Division A agrees to sell the parts to Division B at $18 per unit, the company as a whole will be:
worse off by $30,000 each period.
Explanation:
a) Data and Calculations:
Production capacity of Division A = 34,000
Selling price per unit to outside customers = $21
Variable cost per unit = $13
Total fixed costs = $105,800
Order from Division B = 10,000
Price that Division B purchases from outside supplier = $18
Selling to Division B instead of selling to outside customers will result in a loss of $3 ($21 - $18) per unit
The total loss = $30,000 ($3 * 10,000)
