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Assume a company has two divisions, Division A and Division B. Division A has provided the following information regarding the one product thot it manufactures

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Assume a company has two divisions, Division A and Division B. Division A has provided the following information regarding the one product thot it manufactures and sells on the outside market: Selling price per unit (on the outside market) Variable cost per unit Fixed costs per unit (based on capacity) Capacity in units $ 60 S 46 $ 8 20,000 Division could use Division A's product as a component part in the manufacture of 4,000 units of its own newly designed product Division Bhas received a quote of $55 from an outside supplier for a component part that is comparable to the one that Division A makes Also assume that the company's divisional managers are evaluated based on their division's profits and that Division A is currently selling 15,000 units on the outside market. If the managers of the two divisions do not agree on a transfer price and Division & purchases 4,000 component parts from an outside supplier, what would be the effect on the company's profits? Multiple Choice O Profits would decrease by $25,000 Profits would decrease by $61,000 Profits would decrease by $36,000 Profits would decrease by $30,500

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