Calvin Machinery Company Manufactures Heavy-Duty Equipment Used in Foundries, Mining

Calvin Machinery Company manufactures heavy-duty equipment used in foundries, mining operations, and similar operations. The company is decentralized, with various division managers having control over capital investments and most production decisions. The Cylinder Division fabricates a component which is used by the Press Division in its production of metal presses. The Cylinder Division has been selling to the Press Division at a price of $3,000 per unit. Because of a cost increase, the Cylinder Division wants to increase its price to $3,200, even though the Press Division can still purchase an equivalent component externally for $3,000. The following information has been gathered regarding this issue:
$$\begin{array} { l c } \text { Press Division's annual purchases } &100 \text { units } \\\text { Cylinder Division's variable costs } & \$ 2,400 \text { per unit } \\\text { Cylinder Division's fixed costs } & \$ \quad 600 \text { per unit }\end{array}$$
Required: (support your answers with appropriate calculations)
(a) If the Press Division buys its units externally, the Cylinder Division will have idle capacity for which there are no alternative uses. Will the company as a whole benefit if the Press Division purchases its units externally for $3,000 per unit?
(b) If the Press Division buys its units externally, the Cylinder Division will have idle capacity which can be used to generate a positive cash flow of $40,000. Will the company as a whole benefit if the Press Division purchases its units externally for $3,000 per unit?
(c) Refer to (b). Will your answer change if the price at which the Press Division can buy externally decreases to $2,700 per unit?