19-32 Transfer Pricing; Decision Making 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: $150 Outside price for materials Division A's annual purchases Division B's variable costs per unit Division B's fixed costs, per year Division B's capacity utilization 10,000 units $140 $1,250,000 100% Required 1. Will the company benefit if division A purchases outside the company? Assume that division B cannot sell its materials to outside buyers. 2. Assume that division B can save $200,000 in fixed costs if it does not manufacture the material for division A. Should division A purchase from the outside market? 3. Assume the situation in requirement 1. If the outside market value for the materials drops $20, should division A buy from the outside? Explain. page 860