Division a Makes a Part with the Following Characteristics

Multiple Choice

Division A makes a part with the following characteristics: Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $24 each.
-Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division B continues to purchase parts from an outside supplier rather than from Division A, the company as a whole will be:

A) worse off by $30,000 each period.
B) worse off by $10,000 each period.
C) better off by $15,000 each period.
D) worse off by $35,000 each perioD.Purchasing from outside supplier costs $6 more than producing internally would ($24 - $18) . The total for all 5,000 parts is $6 x 5,000 = $30,000. Therefore, if the company continues to purchase from the outside supplier, it will be $30,000 worse off.