Question 7 2 pts Snead Inc is an automaker. Snead's Division A produces transmission systems. Division B produces engines that are fitted to these transmission systems. Divisions A and B function as autonomous work units that Snead treats as investment centers. Division A has full production autonomy; it can produce and sell transmissions either to Division B at a transfer price (TP) or to an outside customer at the market price of $330 per unit. Division B has full sourcing autonomy; it can buy transmissions from Division B at a transfer price (TP) or source transmissions from an outside supplier at the price of $300 per unit. Division A accounts for the cost to produce a transmission as follows: Direct materials $70.00 Direct labour $155.00 Variable overhead $35.00 Fixed overhead $80.00 Total $340.00 Division B requires 10,000 transmissions. Division A forecasts that it can produce a total of 25,000 transmissions. The outside customer has offered to buy 10,000 transmissions from Division A. 10,000 @ $330 Division A 10,000 @ $TP 10,000 @ $300 Division B Which outcome does Snead Inc, as a profit maximizing firm, prefer and why? Internal transfer because the price to buy transmissions from an outside supplier is greater than Division A's transfer price. O Internal transfer because the price to buy transmissions from an outside supplier is greater than the variable cost for Division A to produce the component. Purchase from an external supplier because the price at which Division A can sell transmissions on the open market is greater than the price at which Division B can buy transmissions from an external supplier. Purchase from an external supplier because the transfer price is greater than the price at which Division B can buy transmissions from an external supplier.