The Pillar Division of the Gothic Building Company produces basic pillars which can be sold to outside customers or sold to the Lantern Division of the Gothic Company. Last year, the Lantern Division bought all of its 30,000 pillars from Pillar at $2.20 each. The following data are available for last year's activities of the Pillar Division:

Capacity in units		360,000	pillars
Selling price per pillar to outside customers	$	2.40
Variable costs per pillar	$	1.55
Fixed costs, total	$	195,000

The total fixed costs would be the same for all the alternatives considered below. Suppose the transfers of pillars to the Lantern Division cut into sales to outside customers by 18,000 units. Further suppose that an outside supplier is willing to provide the Lantern Division with basic pillars at $2.14 each. If the Lantern Division had chosen to buy all of its pillars from the outside supplier instead of the Pillar Division, the change in net operating income for the company as a whole would have been:

Multiple Choice

• $11,100 increase.

• $17,700 decrease.

• $2,400 decrease.

• $1,800 decrease.