Division S of ABC Company makes a part that it sells to other companies. Data on...

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Division S of ABC Company makes a part that it sells to other companies. Data on that part appear below: Selling price on the intermediate market $30 per unit Variable costs per unit $22 per unit Fixed costs per unit (based on capacity) $7 per unit Capacity in units 50,000 units Division B, another division of ABC Company, presently is purchasing 10,000 units of a similar product each period from an outside supplier for $28 per unit, but would like to begin purchasing from Division S. Suppose that Division S has ample idle capacity to handle all of Division B's needs without any increase in fixed costs or cutting into sales to outside customers. If Division S refuses to accept a transfer price of $28 or less and Division B continues to buy from the outside supplier, the company as a whole will: lose $70,000 in potential profit. O lose $20,000 in potential profit. O lose $60,000 in potential profit. O gain $20,000 in potential profit. Division S of ABC Company makes a part that it sells to other companies. Data on that part appear below: Selling price on the intermediate market $30 per unit Variable costs per unit $22 per unit Fixed costs per unit (based on capacity) $7 per unit Capacity in units 50,000 units Division B, another division of ABC Company, presently is purchasing 10,000 units of a similar product each period from an outside supplier for $28 per unit, but would like to begin purchasing from Division S. Suppose that Division S has ample idle capacity to handle all of Division B's needs without any increase in fixed costs or cutting into sales to outside customers. If Division S refuses to accept a transfer price of $28 or less and Division B continues to buy from the outside supplier, the company as a whole will: lose $70,000 in potential profit. O lose $20,000 in potential profit. O lose $60,000 in potential profit. O gain $20,000 in potential profit.

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