In each of the cases below, assume Division X has a product that can be sold to outside customers or to Division Y of the same company. The managers of the divisions are evaluated based on their divisional profits.

Case

A B

Division X:

Capacity in units $100,00092,000$

Number of units being sold to outside customers $100,00068,000$

Selling price per unit to outside customers $ $55$ $ $31$

Variable costs per unit $ $29$ $ $19$

Fixed costs per unit $($based on capacity$)$ $ $7$ $ $4$

Division Y:

Number of units needed for production $24,00024,000$

Purchase price per unit now being paid to an outside supplier $ $47$ $ $38$