The Northern Division of CPP Corporation Supplies Parts to Its

Multiple Choice

The Northern Division of CPP Corporation supplies parts to its Southern Division. These parts are also available in the market from other suppliers. Northern Division is operating at 80% capacity, with a variable cost per unit of $6. Because of a personality conflict between the two division managers, however, Southern has elected to buy the part from outside suppliers at $7 per unit. As a result of this action, CPP Corporation will be:

A) better off.
B) worse off.
C) forced to close Northern Division.
D) forced to close Southern Division.