Truball inc, which manufactures sports equipment, consists of several operating divisions division a has decided to go outside the company to buy materials since division b plans to increase its selling price for the same materials to $200 information for division a and division b follows 

Outside price for materials $175 

Division as annual purchases 12,500 units 

Division bs variable costs per unit $165 

Division bs fixed costs, per year $ 1,300,000 

Division bs capacity utilization 100 %

  

 

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Required: 1. Assume that division B cannot sell it materials to outside buyers. Calculate the net cost or benefit to the company as a whole if Division A purchases the materials outside the company. (Enter all the amounts as positive value.) 2-a. Assume that division B can save $220,000 in fixed costs if it does not manufacture the material for Division A. Calculate the net cost or benefit to the company as a whole for A to purchase outside the company. (Enter all the amounts as positive value.) Required: 1. Assume that division B cannot sell it materials to outside buyers. Calculate the net cost or benefit to the company as a whole if Division A purchases the materials outside the company. (Enter all the amounts as positive value.) 2-a. Assume that division B can save $220,000 in fixed costs if it does not manufacture the material for Division A. Calculate the net cost or benefit to the company as a whole for A to purchase outside the company. (Enter all the amounts as positive value.)

Answer rating: 100% (QA)

Part1 Particulars Workings Amount Purchase Cost from Outside 175 x 12500 2187500 Less Variable Cost ... View the full answer