Given Answer:D

Can someone help me with this question, please? the answer is D but can someone give me a good explanation as to why? please help and thank you!

The following data apply to questions 5-9. The Santa Fe Manufacturing Company has two divisions in Kansas, the Holton Division and the Derby Division. Currently, Derby buys a part (10,000 units) from Holton for $16 per unit. Holton has purchased new equipment and wants to increase the price to Derby to $18 per unit. The controller of Derby claims that she cannot afford to go that high, as it will decrease the division's profit to near zero. Derby can buy the part from an outside supplier for $16 per unit. The incremental costs per unit that Santa Fe incurs to produce each unit are Holton's variable costs of $12. Fixed costs per unit for Holton with the recent purchase of equipment are $5. 5. doc Holton has no alternative uses for its facilities. Should Derby continue to buy from Holton or buy from the external supplier? Company as a whole Derby Division only Buy from external supplier Buy from external supplier Buy from external supplier Buy from Holton Division Buy from Holton Division Buy from Holton Division Buy from Holton Division Buy from external supplier