unit B. Business Unit B manufactures finished goods from a product purchased only from Business Unit A. No alternative external purchase is possible for the Business Unit B. Business Unit A can sell to the Business Unit B or to external customers. There are no inventories in either Business Units. The company has a strong demand to the finished goods produced by Business Unit B and is unable to meet this demand. The data from the last month for the two Business Units, considered as independent profit centres, is: BUSINESS UNIT A Selling price to external customers $20 Selling price to business unit B E16 Total Variable Cost during the period (125,000 Total Fixed Cost during the period (150,000 Additional unit variable cost to sell to external customers (by comparison with internal selling) (1) E3 Sales volume to external customers (in units) 15,000 Sales volume to business unit B (in units) 12,000 (1) This additional unit variable cost is already included in the "Total Variable Cost during the period". BUSINESS UNIT B Selling price to external customers E24 Total Variable Cost during the period (2) (252,000 Total Fixed Cost during the period 690,000 Sales volume to external customers (in units) 12,000 (2) The two Business Units are considered independent. Thus, the selling price from Business Unit A to Business Unit B is a part of the Business Unit B total variable cost. Olympus PLC top management decides to change its policy and it plans to request Business Unit A to stop selling to external customers. Instead, it should provide all its production to Business Unit B. Based on the data provided in the tables above you are required to: a) Estimate the expected effect on the company's profit due to the policy change. (3 points) b) Estimate the expected effect on each Unit's profit due to the policy change. (2 points) c) Assume that you are the manager of Business Unit A. What would your reaction and possibly actions be to this policy change based on the new profitability of your Unit? (2