At practical capacity, the Fabricating Division of Crossville Company has facilities to produce 8,000 units per month. Each unit requires five direct labor-hours. The Assembly Division of the company has forwarded a requisition for 8,000 units to the Fabricating Division. Since Crossville Company uses a market-based transfer pricing system, contribution margin using a $50 market price would be $168,000. The receipt of this requisition from the Assembly Division upset the Fabricating Division manager as he had just been approached by an outside buyer with a rush order for 5,000 units at a $56 unit sale price. Top management’s initial reaction to the conflict is that the outside order should be rejected so that the Assembly Division’s order can be filled.

Required:

a. Determine how the income of the Fabricating Division and Crossville Company would be affected if the outside order is rejected.

b. List four additional factors that should be known before a final decision is made.