Larkey Company has two divisions, A and B. Division A manufactures 5,300 units of product per month. The cost per unit is calculated as follows. Variable costs $ 7.30 Fixed costs 20.40 Total cost $ 27.70 Division B uses the product created by Division A. No outside market for Division As product exists. The fixed costs incurred by Division A are allocated headquarters-level facility-sustaining costs. The manager of Division A suggests that the product be transferred to Division B at a price of at least $27.70 per unit. The manager of Division B argues that the same product can be purchased from another company for $19.80 per unit and requests permission to do so.

Required:

a-1.	Assume Division A transfers the product to Division B calculate the contribution margin per unit of Division A. (Round your answer to 2 decimal places.Omit the "$" sign in your response.)

Contribution margin

$

a-2.	If the proposal from the new company is accepted how much overall contribution margin per unit of Larkey Company be increased or decreased. Assuming fixed costs would remain constant. (Round your answer to 2 decimal places.Omit the "$" sign in your response.)

Contribution margin

$