Daniels Inc., which manufactures sports equipment, consists of several divisions, each operating as a profit SBU.Division A has decided to go outside the company to buy materials since division B informed it that the division's selling price for the same materials would increase to $200.Information for division A and division B follows:

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 A buy from the outside?

Outside price for materials	$150
Division A's annual purchases	10,000 units
Division B's variable costs per unit	$140
Division B's fixed costs	$1,250,000
Division B's capacity utilization	100%