the buffalo division of alfred products, inc. has the capacity to manufacture 10,000 units if a certain part each year. this part sells for $12 per unit on the outside market. the albany division of lafred products, inc. buys 3000 units of this part each year from buffalo, and thus far has paid the market price. harlow company has recently offered to sell albany 3000 units per year of the same part. buffalo divisions costs relating to the product are. Suppose that the labany division buys the 3000 units from the outside supplier at a price of $10 per unit. also suppose that the buffalo division can sell only 6000 units on the outside market. this decision would have no effect on total fixed cost. as a result of albany shifting its purchases to the outside supplier, the yearly net operating income of alfred products, inc, as a whole will

variable cost (per unit)... $7

fixed cost (per year) .... $30,000