Division X makes a part with the following characteristics: Production capacity...
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Accounting
Division X makes a part with the following characteristics:
| Production capacity in units | 34,200 |
| Selling price to outside customers | $22 |
| Variable cost per unit | $17 |
| Fixed cost, total | $102,000 |
| Division Y another division of the company would like to purchase 12,800 units of the part each period from Division X. Division Y is now purchasing these parts from an outside supplier at a price of $20 each. |
| Suppose that Division X is operating at capacity and can sell all of its output to outside customers at its usual selling price. If Division X sells the parts to Division Y at $20 per unit, the company as a whole will be: |
A. Worse off by $51,200 each period.
B.There will be no change in the status of the company as a whole.
C. Worse off by $25,600 each period.
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