Question: help with this exercise please 10. The Gear Division makes a part with the following chara Production capacity Selling price to outside customers Variable cost
10. The Gear Division makes a part with the following chara Production capacity Selling price to outside customers Variable cost per unit Fixed cost- total 25,000 units $18 $100,000 Motor Division of the same company would like to purchase 10,000 units each period from the Gear Division. The Motor Division now purchases the part from an $17 each. Suppose the Gear Division has amply excess capacity to handle all of the Motor Division's needs without any increase in fixed costs and without cutting into sales to outside customers. If the Gear Division refuses to accept the $17 price internally and the Motor Division continues to buy from the outside supplier, the company as a whole will be: outside supplier at a price of A. Worse off by $70,000 each period B. Better off by $10,000 each period C. Worse off by $60,000 each period D. Worse off by $20,000 each period
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