4.

The Tire Division of Traker Company produces tires for off-road sport vehicles. One-third of Tire's output is sold to an internal division of Traker; the remainder is sold to outside customers. Tire's estimated operating profit for the year is:

	Internal				Outside
Sales	$	189,000			$	504,000
Variable costs		126,000				252,000
Fixed costs		43,000				86,000
Operating profits	$	20,000			$	166,000
Unit sales		12,600				25,200

The internal division has an opportunity to purchase 12,600 tires of the same quality from an outside supplier on a continuing basis. The Tire Division cannot sell any additional products to outside customers. Should Traker Company allow its internal division to purchase the tires from the outside supplier at $13.00 per unit?