The Trevor Company Operates Several Investment Centers Included in the Genesis Division's Variable Cost Is $7 for the Genesis

The Trevor Company operates several investment centers. The manager of the Genesis Division expects the following results for the coming year:
$\begin{array}{lrr}\text { Sales }(50,000 \text { units at } \$ 20) & \$ 1,000,000 \\\text { Variable costs } & 600,000 \\\text { Contribution margin } & \$ 400,000 \\\text { Fixed costs } & 250,000 \\\text { Profit } & \$ 150,000\end{array}$
Included in the Genesis Division's variable cost is $7 for a component it buys from an outside supplier. One of these components is required in each unit of the Genesis Division's product. The manager of the Genesis Division has just found that she can buy the component from the Solar Division, another division of Trevor Company. The Solar Division sells 300,000 units of the component to outsiders at $8 and its variable cost is $4 per unit. Solar offers to sell the component to Genesis at a price of $6.
Solar has a capacity of 330,000 units. Assume that Genesis wants to buy all of its needs from one source, so Solar must supply all or none of the Genesis Division's needs for 50,000 units.
Required:
(a) Determine the change in income of the Solar Division of supplying the component to Genesis for $6 per unit as opposed to not supplying the component to Genesis.
(b) Determine the change in income of Trevor Company if Solar supplies the component to Genesis for $6 per unit.

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