(Appendix 12A)Division T of Clocker Company Makes a Timer Which

Multiple Choice

(Appendix 12A) Division T of Clocker Company makes a timer which it sells for $30 to outside customers.The division has supplied the following data concerning the timer: Division S of Clocker Company is currently buying 5, 000 similar timers each month from an overseas supplier at $27 each.Division S would like to acquire its timers from Division T if the price is right. Suppose Division T is operating at capacity and can sell all of the timers it produces to outside customers at its usual selling price.If Division T meets the price of the overseas supplier and sells 5, 000 timers to Division S each month, the effect on the monthly net operating income of the company as a whole will be:

A) increase of $15, 000
B) decrease of $15, 000
C) decrease of $60, 000
D) increase of $10, 000