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10- Lock Division of Morgantown Corp. sells 80,000 units of part Z-25 to the outside market. Part Z-25 sells for $40, has a variable cost
10- Lock Division of Morgantown Corp. sells 80,000 units of part Z-25 to the outside market. Part Z-25 sells for $40, has a variable cost of $22, and a fixed cost per unit of $10. The Lock Division has a capacity to produce 100,000 units per period. The Cabinet Division currently purchases 10,000 units of part Z-25 from the Lock Division for $40. The Cabinet Division has been approached by an outside supplier willing to supply the parts for $36. 10. Now, assume that the Lock Division lowers its price to match the outside price and the Cabinet Division continues to buy inside. What is the effect on Morgantown's current overall profit? A. No change in Morgantown's profits. B. $140,000 decrease in Morgantown's profits. C. $80,000 decrease in Morgantown's profits. D. $40,000 increase in Morgantown's profits. 11. Refer to the previous question. Cabinet division needs 30,000 units instead of 10,000. What is the minimum price per unit that is acceptable for the Lock division
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