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:

Required:

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 $$17,$ calculate the net cost 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.

Req $1$

Req $2A$

Assume the situation in Requirement $1.$ If the outside market value for the materials drops $$17,$ 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.$)$

Net benefit to the company as a whole for A to buy outsideTruball 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 $ $120$

Division A$$s annual purchases $7,000$ units

Division B$$s variable costs per unit $ $110$

Division B$$s fixed costs, per year $ $1,190,000$

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 $$17,$ 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?