Johnson Corp. has two divisions, Division A and Division B. Division B has asked Division A to supply it with 5,000 units of part WD26 this year to use in one of its products. Division A has th capacity to produce 25,000 units of part WD26 per year. Division A expects to sell 21,000 units of part WD26 to outside customers this year at a price of $20.00 per unit. To fill the order from Division B, Division A would have to cut back its sales to outside customers. Division A's variable manufacturing cost (direct labor + direct material + variable overhead) for part WD26 is $12.00 per unit. The variable selling cost when selling to outside customers is $2.00 per unit. This variable selling cost would not have to be incurred on sales of the parts to Division B.

Minimum acceptable transfer price = Variable Cost + Opportunity Cost

Opportunity Cost = Contribution Margin on Lost Sales / # of units transferred

Opportunity Cost = [($20 - 12 - 2) * 1000 units] / 5000 units = $1.20 per unit

Minimum acceptable transfer price = $12 + 1.20 = $13.20

Question: Baker Inc. has approached Division B and has offered to sell 5,000 units of the part for $18 per unit. Division B can either purchase the part from Baker Inc. or transfer it from Division A. How much does the overall profit of Johnson Inc. increase or decrease, if Division B accepts Baker's offer and declines to transfer any units from Division A?

Answer is $24,000 decrease. Please show the work that will generate this answer.

*** PLEASE DO NOT SHOW A SOLUTION TO A DIFFERENT ANSWER. THE ANSWER IS 100% $24000 DECREASE. ***