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Division A makes a part with the following characteristics: Production capacity in units Sales to outside customers Selling price to outside customers Variable cost per
Division A makes a part with the following characteristics: Production capacity in units Sales to outside customers Selling price to outside customers Variable cost per unit Total fixed costs 30,000 units 24,000 units $30 $20 $120,000 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. Managers of eac division are free to make decisions related to purchases and sales of its own products. If a transfer does not take place, the corporation will be: Better off by $10,000 each period Worse off by $10,000 each period Worse off by $20,000 each period Worse off by $40,000 each period
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