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Division A makes a part with the following characteristics: Production capacity - 15,000 units Selling price to outside customers - $32/unit Variable cost - $20/unit

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Division A makes a part with the following characteristics: Production capacity - 15,000 units Selling price to outside customers - $32/unit Variable cost - $20/unit Total fixed cost - $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 agrees to sell the parts to Division B at $28 per unit, the company as a whole will be: no change in profits better off by $10,000 each period worse off by $20,000 each period worse off by $10,000 each period

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