2.

Ohanlon Corporation manufactures numerous products, one of which is called Delta-27. The company has provided the following data about this product: Unit sales (a) Selling price per unit Variable cost per unit Contribution margin per unit (b) Total contribution margin (a) x (b) Traceable fixed expense Net operating income 218,000 $ 62.00 41.00 $ 21.00 $4,578,000 3,550,000 $1,028,000 Required: a. Management is considering increasing the price of Delta-27 by 5%, from $62.00 to $65.10. The company's marketing managers estimate that this price hike would decrease unit sales by 10%, from 218,000 units to 196,200 units. Assuming that the total traceable fixed expense does not change, what net operating income will Delta-27 earn at a price of $65.10 if this sales forecast is correct? b. Assuming that the total traceable fixed expense does not change, if Ohanlon increases the price of Delta-27 to $65.10, what percentage change in unit sales would provide the same net operating income that it currently earns at a price of $62.00? (Round your "Percentage" answer to 1 decimal place.) a. Net operating income b. Percentage change in unit sales Fyodor Corporation has a Parts Division that does work for other Divisions in the company as well as for outside customers. The company's Machine Division has asked the Parts Division to provide it with 7,200 special parts each year. The special parts would require $27 per unit in variable production costs. The Machine Division has a bid from an outside supplier for the special parts at $39.30 per unit. In order to have time and space to produce the special part, the Parts Division would have to cut back production of another part-the QR4 that it presently is producing. The QR4 sells for $52 per unit, and requires $26 per unit in variable production costs. Packaging and shipping costs of the QR4 are $2 per unit. Packaging and shipping costs for the new special part would be only $0.50 per unit. The Parts Division is now producing and selling 36,000 units of the QR4 each year. Production and sales of the QR4 would drop by 5% if the new special part is produced for the Machine Division. Required: a. What is the range of transfer prices within which both the Divisions' profits would increase as a result of agreeing to the transfer of 7,200 special parts per year from the Parts Division to the Machine Division? (Round your final answers to 2 decimal places.) Range of transfer prices: