Division A makes a part with the following characteristics: Production capacity in units 15,000unitsSelling price to outside customers$25 Variable cost per unit$18 Total fixed costs$60,000 ?Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $24 each.?Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division A refuses to accept the $24 price internally and Division B continues to buy from the outside supplier, the company as a whole will be:
A. worse off by $10,000 each period.
B. worse off by $35,000 each period.
C. worse off by $30,000 each period.
D. better off by $15,000 each period.
Answer: C
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