1. Division A makes a part with the following characteristics:

   	Production capacity in units.	15,000 units
   	Selling price to outside customers..........................	$30
   	Variable cost per unit...........	$20
   	Fixed cost per unit................	$4
   	Total fixed costs...................	$60,000

   Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $28 each.

   Suppose that Division A is operating at capacity and can sell all of its output to outside customers at its usual selling price. If Division A sells the parts to Division B at $28 per unit (Division B's outside price), the company as a whole will be:

   	A.	better off by $20,000 each period
   	B.	worse off by $10,000 each period
   	C.	worse off by $40,000 each period
   	D.	There will be no change in the status of the company as a whole