Truball Incorporated which manufactures sports equipment, consists of several operating divisions. Division A has decided to go outside the company to buy materials because 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 $ $135$

Division A$$s annual purchases $8,500$ units

Division B$$s variable costs per unit $ $125$

Division B$$s fixed costs, per year $ $1,220,000$

Division B$$s capacity utilization $100\%$

Required:

$1.$ Assume that division B cannot sell its materials to outside buyers. 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 $$185,000$ 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 $$27,$ 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?