The Blade Division of Axe Company produces hardened steel blades.One-third of Blade's output is sold to the Forestry Products Division of Axe;the remainder is sold to outside customers.Blades' estimated operating profit for the year is: The Forestry Division has an opportunity to purchase 10,000 blades of the same quality from an outside supplier on a continuing basis.The Blade Division cannot sell any additional products to outside customers.Should the Axe Company allow its Forestry Division to purchase the blades from the outside supplier at $1.25 per unit?
A)No;making the blades will save Axe $1,500.
B)Yes;buying the blades will save Axe $1,500.
C)No;making the blades will save Axe $2,500.
D)Yes;buying the blades will save Axe $2,500.

Question

The Blade Division of Axe Company produces hardened steel blades.One-third of Blade's output is sold to the Forestry Products Division of Axe;the remainder is sold to outside customers.Blades' estimated operating profit for the year is:  The Forestry Division has an opportunity to purchase 10,000 blades of the same quality from an outside supplier on a continuing basis.The Blade Division cannot sell any additional products to outside customers.Should the Axe Company allow its Forestry Division to purchase the blades from the outside supplier at $1.25 per unit?
A)No;making the blades will save Axe $1,500. 
B)Yes;buying the blades will save Axe $1,500. 
C)No;making the blades will save Axe $2,500. 
D)Yes;buying the blades will save Axe $2,500.

Quizplus · Accepted Answer

The Answer of The Blade Division of Axe Company produces hardened steel blades.One-third of Blade's output is sold to the Forestry Products Division of Axe;the remainder is sold to outside customers.Blades' estimated operating profit for the year is:  The Forestry Division has an opportunity to purchase 10,000 blades of the same quality from an outside supplier on a continuing basis.The Blade Division cannot sell any additional products to outside customers.Should the Axe Company allow its Forestry Division to purchase the blades from the outside supplier at $1.25 per unit?
A)No;making the blades will save Axe $1,500. 
B)Yes;buying the blades will save Axe $1,500. 
C)No;making the blades will save Axe $2,500. 
D)Yes;buying the blades will save Axe $2,500.

The Blade Division of Axe Company Produces Hardened Steel Blades