Internal or External Acquisitions: No Opportunity Costs The Van Division of

Internal or External Acquisitions:
No Opportunity Costs
The Van Division of MotoCar Corporation has offered to purchase 180000 wheels from the Wheel Division for $42 per wheel. At a normal volume of 500000 wheels
per year production costs per wheel for the Wheel Division are as follows:

The Wheel Division has been selling 500000 wheels per year to outside buyers at $59 each. Capacity is 700000 wheels per year. The Van Division has been
buying wheels from outside suppliers at $55 per wheel. (a) Calculate the net benefit (or cost) to the Wheel Division of accepting the offer from the Van Division.

$___per wheel (b) Calculate the net benefit (or cost) to Motocar Corp. if the Wheel Division accepts the offer from the Van Division.
$___ per wheel