Opportunity Costs. The Cook Division of Colaianne Corporation expects the following results for the coming year on sales to outsiders:

Yesterday, the manager of the Cole Division requested a bid from Cook for 30,000 units. Cole would perform additional work on each unit at a cost of \(\$ 4\) per unit and sell the end product for \(\$ 9\) per unit. Cook can make only 120,000 units per year and would have to forego some regular sales if the Cole business is accepted. Cole has an outside bid of \(\$ 4.50\) per unit.
\section*{Required:}
1. What is the minimum bid Cook should make to Cole, and what transfer pricing goal is being optimized?
2. What is the maximum bid Cook should make to Cole, and what transfer pricing goal is being optimized?
3. If Cole buys from the outside supplier, does Colaianne gain or lose and by how much?

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Sales (100,000 units). $600,000 Variable cost of sales. $300,000 Fixed cost of sales. 200,000 500,000 Profit... $100,000