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Solved: 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

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Truball Inc., which manufactures sports equipment, consists of several operating divisions. Division A has decided to go outsComplete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 3A Req 3B Assume that division B cReq 3B Req 1 Req 2A Req 2B Req 3A From the standpoint of the effect of the transaction on the company as a whole, should DiviReq 1 Req 2A Req 2B Req 3A Req 3B Assume the situation in Requirement 1. If the outside market value for the materials dropsReq 2B Req 3A Req 3B Req 1 Req 2A From the standpoint of the effect of the transaction on the company as a market? whole, sho



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 Division A's annual purchases Division B's variable costs per unit $100 5,000 units $90 Division B's fixed costs, per year $1,150,000 Division B's capacity utilization 1008 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 $160,000 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 $15, 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. Req 3A Req 3B Req 1 Req 2A Req 2B 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 Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 3A Req 3B Assume that division B can save $160.000 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.) Req 1 Req 2B Req 3B Req 1 Req 2A Req 2B Req 3A From the standpoint of the effect of the transaction on the company as a whole, should Division A purchase from the outside market? OYes ONo Req 3A Req 2A Req 1 Req 2A Req 2B Req 3A Req 3B Assume the situation in Requirement 1. If the outside market value for the materials drops $15, calculate the net cost benefit to the company as a whole for A to purchase outside the company. (Enter all the amounts as or positive value.) > Req 2B Req 3B Req 2B Req 3A Req 3B Req 1 Req 2A From the standpoint of the effect of the transaction on the company as a market? whole, should Division A purchase from the outside Yes ONo Req 3A Req 3B

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Answer 1 Net cost to the company as a whole = $ 50,000. Answer 2-a Net benefit to the company as a whole = $ 110,000 Answer 2-b Yes Answer 3-a Net benefit to the company as a whole = $ 25,000

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