Rogers SA, a Swiss transportation equipment manufacturer, is heavily decentralized. Each division head has full authority on all decisions regarding sales to internal or external customers.

The Schwyzdivision has always acquired a certain equipment component from the

BaselStadtdivision. TheBaselStadt division recently acquired specialized equipment that is used primarily to make this component. Because of the new depreciation charges on the equipment, the BaselStadtdivision has informed the Schwyz

division that the unit price will be increased to 315. However, the Schwyz division's management has now decided to purchase the component from outside suppliers at a price of300.

The BaselStadt division has supplied the following production cost data for this component:

Annual production of component (all for sale to Schwyz division)		1,000	units
Basel-Stadt's variable costs per unit		290
Basel-Stadt's fixed costs per unit		20

The company already completed an analysis to determine if it was in its best interest to have Schwyz purchase 1000 units rom an outside supplier assuming that there are no alternative uses for internal facilities of the Basel-Stadt division.

Purchase costs paid to outside suppliers

300,000

Less:

Savings in variable costs

290,000

Net cost (benefit) to company as a whole

10,000

Requirement 1. Suppose theBaselStadtdivision could modify the component at an additional variable cost of 20 per unit and sell the 1,000 units to other customers for 315.Then, would the entire company benefit if theSchwyz division purchased the 1,000 components from outsiders at 300 per unit?

Begin by calculating the contribution margin from selling units to other customers. Then calculate the net benefit (cost) to the company as a whole. (Enter a net cost using parentheses or a minus sign.)

Less:
Contribution margin from selling units to other customers

	Net costs to the company as a result of purchasing from outside suppliers
Net benefit (cost) to the company as a whole

The company as a whole WILL / WILL NOT benefit if the Schwyz division purchases the component from an outside supplier for 300 per unit.