Swan Company has two divisions, Hill and Paradise. Hill produces a unit that Paradise could use in its production. Paradise currently is purchasing 4,000 units from an outside supplier for $46.00. Hill is operating at less than full capacity and has variable costs of $20.80 per unit. The full cost to manufacture the unit is $33.40. Hill currently sells 449,000 units at a selling price of $51.60. How much will Paradise save (lose) by not purchasing from outside if a transfer price of $32.00 is agreed upon?

Multiple Choice

$55,000

$56,000

$27,000

$(6,000)