Zeilinger Products, Inc., has a Screen Division that manufactures and sells a number of products, including a standard screen that could be used by another division in the company, the Home Security Division, in one of its products. Data concerning that screen appear below: Capacity in units 40,000Selling price to outside customers$65Variable cost per unit$28Fixed cost per unit (based on capacity)$26?The Home Security Division is currently purchasing 8,000 of these screens per year from an overseas supplier at a cost of $58 per screen.?Assume that the Valve Division is selling all of the valves it can produce to outside customers. From the standpoint of the Valve Division, what is the lost contribution margin if the valves are transferred internally rather than sold to outside
customers?
A. $88,000
B. $392,000
C. $296,000
D. $1,480,000
Answer: C
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