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^thare as follows:

	Sales to Lawn Products Division	Sales to Outsiders
Revenue	$ 33,000	$ 88,000
Variable costs	22,000	44,000
Fixed costs	6,200	30,000
Gross margin	$ 4,800	$ 14,000
Unit sales	22,000	44,000

The Lawn Products Division has an opportunity to purchase, on a continual basis, 22,000 blades (of identical quality) from an outside supplier, at a cost of $1.55 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 $7,300.

• No, because making the blades would save Dana Company $19,400.

• No, because making the blades would save Dana Company $12,100.

• No, because making the blades would save Dana Company $8,700.

• Yes, because buying the blades would save Dana Company $12,100.