Truball Inc., which manufactures sports equipment, consists of several operating divisions. Division A has decided to go outside the company to buy materials since division B plans to increase its selling price for the same materials to $200. Information for division A and division B follows:

Outside price for materials		$190
Division As annual purchases		14,000	units
Division Bs variable costs per unit		$180
Division Bs fixed costs, per year	$	1,330,000
Division Bs capacity utilization		100	%

Required:

1. Assume that Division B cannot sell its materials to outside buyers and fixed costs cannot be avoided if it does not manufacture the material for Division A. Calculate the net cost or benefit to the company as a whole if Division A purchases the materials outside the company.

2-a. Assume that Division B can save $250,000 in fixed costs if it does not manufacture the material for Division A. Calculate the net cost or benefit to the company as a whole for A to purchase outside the company.

2-b. From the standpoint of the effect of the transaction on the company as a whole, should Division A purchase from the outside market?

3-a. Assume the situation in Requirement 1. If the outside market value for the materials drops $24, calculate the net cost or benefit to the company as a whole for A to purchase outside the company.

3-b. From the standpoint of the effect of the transaction on the company as a whole, should Division A purchase from the outside market?