15 023 points 8024023 Exercise 11-3 (Algo) Transfer Pricing Basics [LO11-3) Sako Company's Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on the speaker follow Selling price per unit on the internediate market $ 124 Variable costs per unit $ 106 Fixed costs per unit (based on capacity) 58 Capacity in units 25,000 Sako Company has a H-F Division that could use this speaker in one of its products. The HI-F Division will need 5.000 speakers per year It has received a quote of $121 per speaker from another manufacturer Sako Company evaluates division managers on the basis of divisional profits book Pri Required: 1. Assume the Audio Division sells only 20,000 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the H. Division? b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices of any between the two divisions? I left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the H-Fi Division? d. From the standpoint of the entire company should the transfer take place? 2. Assume the Audio Division is selling 22,500 speakers per year to outside customers a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division? b. From the standpoint of the HI-FI Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices (if any) between the two divisions? I left free to negotiate without interference, would you expect the division managers to voluntanly agree to the transfer of 5,000 speakers from the Audio Division to the HI-F Division? d. From the standpoint of the entire company should the transfer take place? Check UIVISION 15 0.23 points c. What is the range of acceptable transfer prices (if any) between the two divisions? if left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Division? d. From the standpoint of the entire company, should the transfer take place? 3. Assume the Audio Division is selling 25,000 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the HI-FI Division? b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices (if any) between the two divisions? if left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the HF Division? d. From the standpoint of the entire company, should the transfer take place? 024009 Complete this question by entering your answers in the tabs below. Print References Reg 1 and 10 RIC Reg 10 Reg 2A and 28 Reg 20 Reg 2D Reg JA and 30 Reg 3C Rego Assume the Audio Division sells only 20,000 speakers per year to outside customers a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the HI-FI Division b. From the standpoint of the HR Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division a. Lowest acceptable transfer price Highest acceptable transfer prion Reg 10 > II 15 c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Division? d. From the standpoint of the entire company, should the transfer take place? 23 oints Complete this question by entering your answers in the tabs below. 8 02:00:54 Reg 1A and 1B Reg 10 Req1D Reg 2A and 2B Red 20 Reg 2D Reg 3A and 3B Reg 3C Reg 3D eBook What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Division? Assume the Audio Division is now selling only 20,000 speakers per year to outside customers. Hint Print References Identify the range of acceptable transfer prices (if any) There is not a range of acceptable transfer prices There is a range of acceptable transfer prices as shown below Transfer price 5 Are the managers likely to agree on a transfer price? Yes ONO 5 Reg 1A and 18 Reg 10 15 a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division? b. From the standpoint of the H-F Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? c. What is the range of acceptable transfer prices (if any) between the two divisions? If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Division? d. From the standpoint of the entire company, should the transfer take place? 0.23 points 80224 Complete this question by entering your answers in the tabs below. Book Reg 1A and 13 Reg 1C Req 10 Reg 2A and 28 Red 20 Reg 20 Reg 3A and Reg 30 Reg 30 rt References Assume the Audio Division is selling 22,500 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the HI-FI Division b. From the standpoint of the H-F Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division Show less Lowest acceptable transfer price b. Highest acceptable transfer price