Division As cost accounting records show that the cost of its product is $153 per unit$115 in variable costs and $38 in fixed costs. The market price of the product, $164, barely covers Division As cost of production plus its selling and administrative costs. Division A has a maximum capacity of 112,000 units; it is currently producing and selling 75,000 units. Division B makes a product that uses Division As product and would like to purchase 10,400 units from Division A for $154. With $45 additional variable costs, Division B produces and sells the product for $268. Division As manager is not happy with Division Bs offer and is refusing to sell.

Calculate the increase in corporate income in the following situations: a. Division A sells 10,400 units to Division B for $154 each, and Division B produces and sells 10,400 units for $268. b. Division A does not sell to Division B. Division B purchases 10,400 units from an external supplier at $164 each and produces and sells 10,400 units for $268.