The Gear Division Makes a Part with the Following Characteristics

Multiple Choice

The Gear Division makes a part with the following characteristics:
$$\begin{array} { | l | r | } \hline \text { Production capacity } & 25,000 \text { units } \\\hline \text { Selling price to outside customers } & \$ 18 \\\hline \text { Variable cost per unit } & \$ 11 \\\hline \text { Fixed cost, total } & \$ 100,000 \\\hline\end{array}$$ 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 outside supplier at a price of $17 each.Suppose that the Gear Division is operating at capacity and can sell all of its output to outside customers.If the Gear Division sells the parts to Motor Division at $17 per unit,the company as a whole will be:

A) better off by $10,000 each period.
B) worse off by $20,000 each period.
C) worse off by $10,000 each period.
D) There will be no change in the status of the company as a whole.