Variable Cost = Direct Materials + Direct Labor + Variable Overhead = $20+ $12 + $8 = $40 Division C Income from Division D Purchase = Variable Cost + Division D Sale = $40 x 200,000 = $8,000,000 Mccann's income would decrease by $8,000,000 if Division D purchases its desired 200,000 units of C82 from the market rather than from Division C. Cost of Purchase from Market = Selling Price x Units Purchased = $50 x 200,000 = $10,000,000