Division y of the same company would like to purchase 12800

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Reference no: EM13609902

Division X makes a part with the following characteristics:
Production capacity 34,200 units
Selling price to outside customers $22
Variable cost per unit $17
Fixed cost, total $102,000

Division Y of the same company would like to purchase 12,800 units each period from Division X. Division Y now purchases the part from an outside supplier at a price of $20 each.

Suppose that Division X is operating at capacity and can sell all of its output to outside customers. If Division X sells the parts to Division Y at $20 per unit, the company as a whole will be:

There will be no change in the status of the company as a whole.
worse off by $25? each period.
better off by $25? each period.
worse off by $51&amp.

Reference no: EM13609902

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