The Tire Division of Traker Company produces tires for off-road sport vehicles. One-third of Tire's output is sold to an internal division of Traker; the remainder is sold to outside customers. Tire's estimated operating profit for the year is:
The internal division has an opportunity to purchase 10,000 tires of the same quality from an outside supplier on a continuing basis. The Tire Division cannot sell any additional products to outside customers. Should the Traker Company allow its internal division to purchase the tires from the outside supplier at $13.00 per unit?
No; making the tires will save Traker $15,000.
Yes; buying the tires will save Traker $15,000.
No; making the tires will save Traker $30,000.
Yes; buying the tires will save Traker $30,000.
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