USE THE FOLLOWING INFO FOR THE NEXT 2 QUESTIONS

Given the following data for Division S:

Selling price to outside customers	$210
Variable cost per unit	90
Fixed cost per unit (based on capacity)	70
Capacity 100,000 units

. This is an IDLE/EXCESS CAPACITY question. Division B would like to purchase 5,000 units from Division S at a negotiated transfer price of $180 per unit. Division S has idle/excess capacity to handle Division B's requirements. Division B currently purchases from an outside supplier at a price of $185. If Division S rejects a $180 negotiated transfer price, the net income of the company, as a whole, will change by

A) $400,000

B) $(450,000

C) $(475,000)

D) $(430,000)

E) $500,000

29. This is a FULL CAPACITY question. Division B would like to purchase 5,000 units from Division S at a negotiated transfer price of $135 per unit. Division S is at full capacity and therefore does not have the capacity to handle Division B's requirements. Division B currently purchases from an outside supplier at a price of $145. If Division S accepts a $135 negotiated transfer price, the net income of the company, as a whole, will change by

A) $(300,000)

B) $(325,000)

C) $(360,000)

D) $180,000

E) $210,000