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
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.

Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into sales to outside customers. What would be the minimum acceptable price that Division A would accept to transfer 5,000 units of the part to Division B?

$30

$20

$10

None of the above

2. Jack Sparrow, Inc. produces and sells 20,000 units of Product X each month. The selling price of Product X is $30 per unit, and variable expenses are $21 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $50,000 of the $250,000 in fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the company's overall net operating income would:

decrease by $70,000 per month

increase by $70,000 per month

increase by $20,000 per month

decrease by $20,000 per month