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The Lilly Company’s Switch Division manufactures an electrical switching unit that can be sold either to outside customers or to the Fiber Optics Division of the Lilly Company

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The Lilly Company’s Switch Division manufactures an electrical switching unit that can be sold either to outside customers or to the Fiber Optics Division of the Lilly Company. Selected operating data on the two divisions are given below:

                                  Switch Division:

                                                Unit selling price to outside customers…………….         $            80

                                                Variable production cost per unit…………………..                        45

                                                Variable selling and administrative

                                                     expense per unit………………………………...                6

                                                Fixed production cost in total………………………   400,000*

                                  Fiber Optics Division:

                                                Outside purchase price per unit  &