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Division S of Goody Company Makes a Part with the Following

question 42

Multiple Choice

Division S of Goody Company makes a part with the following characteristics: $\begin{array}{lrr} \text { Production capacity. } & \text {50,000 units } &\\ \text {Selling price on the outside market. } &£ 20 \\ \text {Variable costs per unit. } &£ 12 \\ \text { Fixed costs per unit } &£ 3\\\end{array}$

Division B, another division in the same company, presently is purchasing 10,000 units of a similar part each period from an outside supplier, but would like to start purchasing from Division S. Division B is now paying a price of £18 per unit to the outside supplier.
-Suppose that Division S can sell all that it can produce to outside customers at its regular selling price. If Division S sells to Division B at a price of £18 per unit, the company as a whole will be

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