Ajax Division of Carlyle Corporation produces electric motors,
20% of which are sold to Bradley Division of Carlyle and the
remainder to outside customers. Carlyle treats its divisions as
profit centers and allows division managers to choose their
sources of sale and supply. Corporate policy requires that all
interdivisional sales and purchases be recorded at variable cost as
a transfer price. Ajax Division’s estimated sales and standard cost
data for the year ending December 31, 2012, based on the full
capacity of 100,000 units, are as follows:

. . . . . . . Bradley . . .Outsiders

Sales . . . $ 900,000 $ 8,000,000

Variable costs (900,000) (3,600,000)

Fixed costs . . (300,000) (1,200,000)

Gross margin . . $(300,000) $ 3,200,000

Unit sales . . .20,000 80,000

Ajax has an opportunity to sell the above 20,000 units to an outside
customer at a price of $75 per unit during 2011 on a continuing
basis. Bradley can purchase its requirements from an outside
supplier at a price of $85 per unit.
Assuming that Ajax Division desires to maximize its gross margin,
should Ajax take on the new customer and drop its sales to Bradley
for 2012, and why?