Refer to the information presented in E11-12, but assume that the Electronics Department requires the antenna to be made from a specific blend of metals. This would raise the variable cost per unit to \($27.\)

Required:

1. Explain whether the Fabrication Department should accept the \($25\) transfer price proposed by management.

2. Determine the minimum transfer price that it will accept.

3. Determine the mutually beneficial transfer price so that the two divisions equally split the profits from the transfer.

Data from E11-12

The Fabrication Division of Hawking Company manufactures an antenna component used by the Electronics Division. This antenna is also sold to external customers for \($35\) per unit. Variable costs for the antenna are \($17\) per unit and fixed cost is \($7\) per unit. Hawking executives would like for the Fabrication Division to transfer 8,000 units to the Electronics Division at a price of \($25\) per unit.