Division A makes a part with the following characteristics:

Production capacity in units		31,800	units
Selling price to outside customers	$	21
Variable cost per unit	$	16
Total fixed costs	$	101,900

Division B, another division of the same company, would like to purchase 14,700 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $19 each.

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. If Division A refuses to accept the $19 price internally and Division B continues to buy from the outside supplier, the company as a whole will be:

Multiple Choice

• a. worse off by $73,500 each period.

• b. worse off by $44,100 each period.

• c. worse off by $58,800 each period.

• d. worse off by $29,400 each period.