1. JUST Industries has multiple divisions. One division, AVA Products, makes a component that anotherdivision, MAX, is currently purchasing on the open market. AVA Products currently has a capacity toproduce 500,000 components at a variable cost of $7.50 and a full cost of $10.00. AVA Products hasoutside sales of 460,000 components at a price of $12.50 per unit. MAX currently purchases 50,000units from an outside supplier at a price of $12.00 per unit. Assume that MAX desires to use a singlesupplier for its component.Required :
【題組】a. What will be the effect on JUST Industries' operating profit if the transfer is made internally? Assumethe 50,000 units MAX needs are either purchased 100% internally or 100% externally.