?Oxco has two divisions, A and B. Division A makes a component for air conditioning units?which it can only sell to Division B. It has no other outlet for sales.?
Current information relating to Division A is as follows:?
Marginal cost per unit? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? $100?
Transfer price of the component? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?$165?
Total production and sales of the component each year? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 2,200 units?
Specific fixed costs of Division A per year? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?$10,000?
Cold Co has offered to sell the component to Division B for $140 per unit.
If Division B?accepts this offer, Division A will be shut.?If Division B accepts Cold Co’s offer, what will be the impact on profits per year for the?group as a whole??