Division A makes a part with the following characteristics:

Production capacity in units	30,200	units
Selling price to outside customers	$ 22
Variable cost per unit	$ 17
Total fixed costs	$ 102,900

Division B, another division of the same company, would like to purchase 17,300 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $20 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 $20 per unit, the company as a whole will be:

rev: 10_24_2020_QC_CS-237557

Multiple Choice

• There will be no change in the status of the company as a whole.

• better off by $34,600 each period.

• worse off by $69,200 each period.

• worse off by $34,600 each period.