The Blade Division of Dana Company produces hardened steel baldes. One-third of the Blade Division's output issssss sold to the Lawn products Division of Dana; the remainder

is sold to outside customers. The Blade Division's estimated sales and standard cost data for the year follow:

Lawn Products Outsiders

Sales P15,000 P40,000

Variable Cost (10,000) (20,000)

Fixed Cost (3,000) (6,000)

Gross profit P2,000 P14,000

Unit sales 10,000 20,000

The Lawn Products Division has an opportunity to purchase 10,000 identical quality blades form an outside supplier at a cost of P1.25 per unit on a continuing basis. Assume that the Blade Division cannot sell any additional products to outside customers, that the fixed costs cannot be reduced, and that no alternative use of facilities is available.

Required: Should Dana allow its Lawn Products Division to purchase the blades from the outside supplier? Support your answer by computing the increase or decrease in Dana Corporation operating costs.