1.Based on the information provided in the Solen case above, what would be the net cost per assembly incurred by Solen, if ID purchases the sub-assemblies from Xpan?

2.Based on the information provided in the Solen case assuming that Yannathan intervenes in the dispute and directs Allira to buy the required sub-assemblies from the Panel Division at $420 per sub-assembly and that the Panel Division and the Cell Division share the profit equally (in terms of dollars), how much profit per sub-assembly would each of the two divisions record?

[Express your answer to the nearest dollar.]

Solen Inc (Solen) is a multi-divisional, vertically integrated, manufacturer of Solar Panels. CEO Yannathan Martinez is happy for divisions to be autonomous investment centres. This seems to have worked successfully in the past with all three divisions having consistently met their financial targets. Solen has three divisions: The Cell Division (CD) manufactures photovoltaic solar cells and sells them to customers who then encapsulate them into a wide variety of modules. The Panel Division (PD) manufactures a range of modules, electronic invertors, and sub-assemblies that are used in Solar Installations. The Installation Division (ID) designs, supplies, and assembles customised solar photovoltaic systems. Refer to the diagram below. The existing transfer pricing policy at Solen is full sourcing autonomy with the internal transfer price set by negotiation. The prevailing market price is generally used as the starting point of negotiations. Approximately 50% of each division's activity is currently transferred internally. Given there is sourcing autonomy, disputes often arise; in which case, Kalina Yang is assigned the task of finding a resolution. A dispute has arisen and Kalina needs your help: PD has developed a new sub-assembly that meets the needs of ID. The sub-assembly uses cells produced by CD. Currently CD has no trouble supplying these cells as it has spare capacity. ID uses the sub-assemblies in a variety of applications and expects to continue doing so for at least the next few years. The PD manager, Jabiru Jensen, believes the sub-assemblies should be supplied by her division, partly because the two divisions collaborated on the design and development of the new sub-assembly. The Installation divisional manager, Allira Pang, thinks otherwise. Two outside companies (Xpan and Sunelec) have also offered to supply the same sub-assembly. Furthermore, if Xpan supply the required sub-assemblies, it would source the cells from Solen's Cell Division and the invertors from Solen's Panel Division. A summary of the situation including the various costs per sub-assembly and selling prices per subassembly is provided in the diagram below