Question - Tiffany Company has two divisions, Gold and Silver. Gold produces a unit that Silver could use in its production. Silver currently is purchasing 50,000 units from an outside supplier for $25. Gold is operating at less than full capacity and has variable costs of $13.50 per unit. The full cost to manufacture the unit is $20. Gold currently sells 450,000 units at a selling price of $27. If an internal transfer is made, variable shipping and administrative costs of $1 per unit could be avoided. If the internal transfer is made, what would be the impact on Tiffany Company's overall profits?
A. $625,000 increase
B. $1,125,000 increase
C. $225,000 decrease
D. No change in profits