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Rug, lnc, has acquired a new backing division that produces rubber backing, which it sells for $220 per square yard, Sales are about 1,200,000 square yards per year, Since the Backing Division has a capacity ot2,000,000 square yards per year, top management is thinking that it might be wise for the company's Tutting Division to start purchasing from the newly acquired Backing Division. The Tutting Division current purchases the following from an outside supplier: 600,000 square yards per year $2.10 Price paid to outside supplier | The Backi I Division's cost oer souare ardfollows: Direct materials Direct Labor Variable overhead Total cost