The Blade Division of Dana Company produces hardened steel blades. Approximately one-third of the Blade Division's output is sold to the Lawn Products Division of Dana; the remainder is sold to outside customers. Blade Division's estimated sales and cost data for the year ending June 30^th are as follows:

	Sales to Lawn Products Division				Sales to Outsiders
Revenue	$	30,000			$	80,000
Variable costs		20,000				40,000
Fixed costs		5,200				22,500
Gross margin	$	4,800			$	17,500
Unit sales		20,000				40,000

The Lawn Products Division has an opportunity to purchase, on a continual basis, 10,000 blades (of identical quality) from an outside supplier, at a cost of $1.80 per unit. Assume that the Blade Division cannot sell any additional products to outside customers. Assume, too, that there are no short-term avoidable fixed costs. Based solely on short-term financial considerations, should Dana allow its Lawn Products Division to purchase the blades from the outside supplier, and why?

Multiple Choice

• Yes, because buying the blades would save Dana Company $6,000.

• No, because making the blades would save Dana Company $7,000.

• Yes, because buying the blades would save Dana Company $8,000.

• No, because making the blades would save Dana Company $8,000.