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Division S makes a part that it sells to customers outside of the company. Data...

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Accounting

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Division S makes a part that it sells to customers outside of the company. Data concerning this part appear below: Selling price to outside customers Variable Cost per unit Total fixed costs Capacity in units $40 per unit $30 per unit $40,000 20,000 units Division B of the same company would like to use the part manufactured by Division S in one of its products. Division B currently purchases a similar part made by an outside company for $38 per unit and would substitute the part made by Division S. Division B requires 5,000 units of the part each period. Division S currently produces and sells 13,000 units. If Division S sells to Division B rather than to outside customers, the variable cost be unit would be $1 lower. If Division B buys the part from Division S instead of the outside supplier, what would be the change in operating income at the company level? $45,000 increase $40,000 increase O $10,000 decrease $30,000 increase

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