$8 Sako Company's Audio Division produces a speaker that is used by manutacturers of various audio products. Sales and cost data on the speaker follow Selling price per unit on the intermediate market $75 Variable costs per unit $ 58 Fixed costa per unit (based on capacity) Capacity in unita 25.000 Sako Company has a H-F Division that could use this speaker in one of its products. The Hi-Fi Division will need 5.000 speakers per year. It has received a quote of $73 per speaker from another manufacturer. Sako Company evaluates division managers on the basis of divisional profits 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-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 H-Fi Division? d. From the standpoint of the entire company, should the transfer take place? 2. Assume the Audio Division is seling 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 H-F Division? b. From the standpoint of the H-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 (dany) 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 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 H-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 for free to o 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-F Division? d. From the standpoint of the entire company, should the transfer take place? Complete this question by entering your answers in the tabs below. Reg BA and 38 Reg 30 Rec 20 Reg 2A and 26 Reo C Reg 2C Reg LA and 18 Reg 1D Req1C 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 Division 6. From the standpoint of the Hi-F Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? a. Lowest acceptable transfer price D. Highest acceptable transfer price Reg 1A and 1 Reg 1C References
