SUB-OPTIMAL DECISIONS

Hello Sir, I hope you're doing great, Please help me understand this point in the following illustration... Suppose a company has two profit centres, A and B. A can only sell half its maximum output of 800 units externally because of limited demand. It transfers the other half of its output to B which also faces limited demand. Costs and revenues in an accounting period are as follows. A B Total $ $ $ External sales 8,000 24,000 32,000 Costs of production in the division 13,000 10,000 23,000 Profit 9,000 For example, suppose division B could buy the product from an outside supplier for $10 instead of paying $15 ($6,000/(800/2)) to division A. This transfer price would therefore force division B to buy the product externally at $10 per unit, although it could be manufactured internally for a variable cost of $(13,000 – 4,800 – 1,000)/800 = $9 per unit. Although division B (the buying division) would save ($15 – $10) = $5 per unit by buying externally, the organisation as a whole would lose $400, as follows. Per unit $ Marginal cost of production 9 External purchase cost 10 Loss if buy in 1 The overall loss on transfer/purchase of 400 units is therefore 400 * $1 = $400. ''''''''''''This loss of $1 per unit assumes that any other use for the released capacity would produce a benefit of less than $400.'''''''''' ( I don't understand this quoted phrase above can you please elaborate to make it clear to me..)