The Domino Company has two decentralized divisions, A and B. Division A has always purchased certain units from Division B at $75 per unit. Because Division B plans to raise the price to $100 per unit, Division A desires to purchase these units from outside suppliers for $75 per unit. Ilivision B's costs follow:
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Division B's variable costs per unit
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$70
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Division B's annual fixed costs
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$15,000
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Division A's purchase
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1,000 units
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If Division A buys from an outside supplier, the facilities Division B uses to manufacture these units will remain idle. Would it be more profitable for the company to enforce the $100 transfer price than to allow Division A to buy from outside suppliers at $75 per unit?