The Hammer Division of Excel Company produces hardened sledge hammers.

The Hammer Division of Excel Company produces hardened sledge hammers. One-third of Hammer's output is sold to the Government Products Division of Excel the remainder is sold to outside customers. Hammer's estimated operating profit for the year is: Sales Variable costs Fixed costs Operating profits Unit sales Government Products Division $ 69,000 (11,800) (12,000) $ 45,200 11,800 Outside Customers $148,000 (23,600) (24,000) $100,400 23,600 The Government Products Division has an opportunity to purchase 11,800 hammers of the same quality from an outside supplier on a continuing basis. The Hammer Division cannot sell any additional products to outside customers. Should the Excel Company allow its Government Products Division to purchase the hammers from the outside supplier at $1.25 per unit? The Government Products Division has an opportunity to purchase 11,800 hammers of the same quality from an outside supplier on a continuing basis. The Hammer Division cannot sell any additional products to outside customers. Should the Excel Company allow its Government Products Division to purchase the hammers from the outside supplier at $1.25 per unit? Multiple Choice O No; making the hammers will save Excel $1.950. Yes, buying the hammers will save Excel $1950 No; making the hammers will save Excel $2,950 Yes, buying the hammers will save Excel $2.950