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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
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 $ 195 Division A's annual purchases 14,500 units Division B's variable costs per unit $ 185 Division B''s fixed costs, per year $ 1,340,000 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 $235,000 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 $12, 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? Complete this question by entering your answers in the tabs below. Reqg 1 Req 2A Req 2B Req 3A Req 3B 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. (Enter all the amounts as positive value.) Req 1 Req 2A Req 2B Req 3A Req 3B Assume that division B can save $235,000 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. (Enter all the amounts as positive value.) N A From the standpoint of the effect of the transaction on the company as a whole, should Division A purchase from the outside market? Assume the situation in Requirement 1. If the outside market value for the materials drops $12, calculate the net cost or benefit to the company as a whole for A to purchase outside the company. (Enter all the amounts as positive value.) From the standpoint of the effect of the transaction on the company as a whole, should Division A purchase from the outside market?
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