The Micro Division of ACT Computers produces computer chips that are sold to the Personal Computer Division and to outsiders.Operating data for the Micro Division for 2017 are as follows:

\begin{array} { | l | r | r | } \hline & \text { Internal Sales } & \text { External Sales } \\\hline \text { Sales: } & & \\\hline 300000 \text { chips at } \$ 10 & \$ 3000000 & \\\hline 200000 \text { chips at } \$ 12 & & \$ 2400000 \\\hline \text { Variable expenses at } \$ 4 & \underline { 1200000 } & \underline { 800000 } \\\hline \text { Contribution margin } & \$ 1800000 & \$ 1600000 \\\hline \text { Fixed cost (allocated in units) } & \underline { 1500000 } & \underline { 1000000 } \\\hline \text { Operating profit } & \$ 300000 & \$ 600000 \\\hline\end{array}

The Personal Computer Division has just received an offer from an outside supplier to furnish chips at $8.60 each.The manager of Micro Division is not willing to meet the $8.60 price.She argues that it costs her $9.00 to produce and sell each chip.Sales to outside customers are at a maximum of 200 000 chips.
Required:
a.Verify the Micro Division's $9.00 unit cost figure.
b.Should the Micro Division meet the outside price of $8.60? Explain.
c.Could the $8.60 price be met and still show a profit for the Micro Division sales to the Personal Computer Division? Show computations.
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