Question: 2) A corporation has a segment, Division A that sells a part on the outside market for $120.Its costs, based on a unit capacity of

2) A corporation has a segment, Division A that sells a part on the outside market for $120.Its costs, based on a unit capacity of 200,000 units, are $25 variable and $45 fixed.The company has a related segment, Division B that could use the part in its own assembly operations.Division B buys the part from another supplier for $112, and it will need 40,000 units.

Required: 1) Assume division A is selling 140,000 units to outside customers.

If left to bargain freely, would you expect the division managers to voluntarily agree on a transfer of units from Division A to Division B?Give reasons. From the standpoint of the entire company, should the transfer take place?Give reasons.

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