1.

The Blade Division of Axe Company produces hardened steel blades. One-third of Blade's output is sold to the Forestry Products DIvision of Axe; the remalnder s sold to outside customers. Blades' estimated operating profit for the year is: ForestryOutside DivIsIon Customers 68,000 (11,400)(22,800) 3700)6350) Sales Variable costs Fixed costs 29,000 $13,900 38850 Operating profits 11,40022800 Unlt sales The Forestry Division has an opportunity to purchase 11,400 blades of the same quality from an outside supplier on a continuing basis. The Blade DIvislon cannot sell any additional products to outslde customers. Should the Axe Company allow its Forestry Division to purchase the blades from the outside supplier at $1.95 per unit? O No; making the blades will save Axe $16,620 O Yes; buying the blades will save Axe $10,830 O Yes; buying the blades will save Axe $16,620 O No; making the blades will save Axe $10,830