Answer Happy

Division makes a part with the following characteristics Production capacity in units 50,000 units Sales to outside customers 42,000 units Selling price to outside customers $80 Variable cost per unit $50 Total fixed costs $300,000 Division R, another division of the same company, would like to purchase 6,000 units of the part each period from Division Q. Division R is now purchasing these parts from an outside supplier at a price of $78 each. Managers of each division are free to make decisions related to purchases and sales of its own products. If a transfer does not take place, the corporation will be: Worse off by $84,000 each period Better off by $12,000 each period Worse off by $12,000 each period O Worse off by $168,000 each period