The Carla Vista Company is a multidivisional company. Its managers have full responsibility for profits and complete autonomy to accept or reject transfers from other divisions. Division A produces a sub$-$assembly part for which there is a competitive market. Division B currently uses this subassembly for a final product that is sold outside at $$2,390.$ Division A charges division B market price for the part, which is $$1,390$ per unit. Variable costs are $$1,040$ and $$1,170$ for divisions A and $B,$ respectively.

The manager of division B feels that division A should transfer the part at a lower price than market because, at market, division $B$ is unable to make a profit.