Division As cost accounting records show that the cost of its product is $151 per unit$118 in variable costs and $33 in fixed costs. The market price of the product, $162, barely covers Division As cost of production plus its selling and administrative costs. Division A has a maximum capacity of 100,800 units; it is currently producing and selling 77,900 units. Division B makes a product that uses Division As product and would like to purchase 10,000 units from Division A for $158. With $40 additional variable costs, Division B produces and sells the product for $234. 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 10,000 units to Division B for $158 each, and Division B produces and sells 10,000 units for $234. b. Division A does not sell to Division B. Division B purchases 10,000 units from an external supplier at $162 each and produces and sells 10,000 units for $234.

Increase in corporate income

a. $

b. $