Assume that Division A has a product that can be sold either to Division B of the same company or to outside customers. The managers of both divisions are evaluated based on their own division's return on investment $($ROI$).$ The managers are free to decide if they will participate in any internal transfers. All transfer prices are negotiated.

Division A:

Capacity in units $=300,000$

Number of units now being sold to outside customers $=300,000$

Selling price per unit on the outside market $=$$$41$

Variable costs per unit $=$$$19$

Fixed costs per unit $($based on capacity$)=12$

Division B:

Number of units needed annually $=100,000$

Purchase price now being paid to an outside supplier $=$$$38$

Division A can avoid $$6$ per unit in variable costs on any sales to Division B$.$ Assume Division A offers to sell $100,000$ units to Division B fot $$36$ per unit and that Division B refuses this price. What will be the impact on company profit compared to the profit if the offer was accepted?

$-$$$300,000$

$-$$$200,000$

$+$$$100,000$

$+$$$300,000$

$+$$$200,000$