Division As cost accounting records show that the cost of its product is $151 per unit$103 in variable costs and $48 in fixed costs. The market price of the product, $166, barely covers Division As cost of production plus its selling and administrative costs. Division A has a maximum capacity of 110,400 units; it is currently producing and selling 77,200 units. Division B makes a product that uses Division As product and would like to purchase 12,000 units from Division A for $154. With $44 additional variable costs, Division B produces and sells the product for $233. 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 12,000 units to Division B for $154 each, and Division B produces and sells 12,000 units for $233. b. Division A does not sell to Division B. Division B purchases 12,000 units from an external supplier at $166 each and produces and sells 12,000 units for $233.