1. Dockside Enterprises Incorporated operates two divisions: (1) a management division that owns and manages bulk carriers on the Great Lakes and (2) a repair division that operates a dry dock in Tampa, Florida. The repair division works on company ships and outside large-hull ships. The repair division has an estimated variable cost of $30 per labor-hour, has a backlog of work for outside ships, and charges $72 per hour for labor, which is standard for this type of work. The management division complained that it could hire its own repair workers for $40 per hour, including leasing an adequate work area.

2.

You have been provided with the following information for Division X of a decentralized company:

Selling price	$	110
Variable cost per unit		80
Fixed cost per unit		22
Sales volume (units)		21,300
Capacity (units)		24,700

Division Y of the same company would like to purchase all of its units internally. Division Y needs 10,200 units each period and currently pays $104 per unit to an outside firm. What is the lowest price that Division X could accept from Division Y? (Assume that Division Y wants to use a sole supplier and will not purchase less than 10,200 from a supplier.)