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Division X makes a part with the following characteristics: Production capacity in units 34,200 Selling price to outside customers $22 Variable cost per unit $17

Division X makes a part with the following characteristics:

Production capacity in units 34,200
Selling price to outside customers $22
Variable cost per unit $17
Fixed cost, total

$102,000

Division Y another division of the company would like to purchase 12,800 units of the part each period from Division X. Division Y is now purchasing these parts from an outside supplier at a price of $20 each.

Suppose that Division X is operating at capacity and can sell all of its output to outside customers at its usual selling price. If Division X sells the parts to Division Y at $20 per unit, the company as a whole will be:

A. Worse off by $51,200 each period.

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

C. Worse off by $25,600 each period.

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