Division A makes a part with the following characteristics: ...
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Accounting
Division A makes a part with the following characteristics:
Production capacity in units
31,000
units
Selling price to outside customers
$
19
Variable cost per unit
$
13
Total fixed costs
$
108,600
Division B, another division of the same company, would like to purchase 18,900 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $15 each.
Suppose that Division A is operating at capacity and can sell all of its output to outside customers at its usual selling price. If Division A agrees to sell the parts to Division B at $15 per unit, the company as a whole will be:
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