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Use the following to answer questions 4-5: Division A produces a part with the following...

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Use the following to answer questions 4-5: Division A produces a part with the following characteristics: Capacity in Units 50,000 units Selling Price per Unit $30 Variable Costs per Unit $18 Fixed Costs per Unit Division B, another division in the company, would like to buy this part from Division A. Division B is presently purchasing 4,000 parts from an outside source at $27 per unit. If Division A sells to Division B, $2 in variable costs can be avoided. $3 4. Suppose Division A is currently operating at capacity and can sell all of the units it produces on the outside market for its usual selling price. From the point of view of Division A, any sales to Division B should be priced no lower than which of the following? A) $30. B) $18. C) $28. D) $29. 5. Given the information in 4 above, what would the effect on the operating income of the company as a whole, if Division B continues to purchase all the parts from its outside source? A) $12,000 increase B) $ 4,000 decrease C) $12,000 decrease D) $ 4.000 increase

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