Using the information from requirement 1 of exercise 19-33, assume that division B could sell 10,000 units outside for $210 per unit with variable marketing costs of $8.

In exercise 19-33, Should division B sell outside or to division A? Explain.

Daniels 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 informed it that the division’s selling price for the same materials would increase to $200. Information for division A and division B follows:

Outside price for materials ............ $150

Division A’s annual purchases .........10,000 units

Division B’s variable costs per unit ........ $140

Division B’s fixed costs , per year .......... $1,250,000

Division B’s capacity utilization ......... 100%