Alpha and Beta are divisions within the same company. The managers of both divisions are evaluated based on their own divisions return on investment (ROI). Assume the following information relative to the two divisions:

	Case
	1	2	3	4
Alpha Division:
Capacity in units	87,000	407,000	157,000	307,000
Number of units now being sold to outside customers	87,000	407,000	107,000	307,000
Selling price per unit to outside customers	$ 44	$ 104	$ 110	$ 64
Variable costs per unit	$ 32	$ 79	$ 75	$ 40
Fixed costs per unit (based on capacity)	$ 6	$ 15	$ 20	$ 9
Beta Division:
Number of units needed annually	12,000	37,000	27,000	121,400
Purchase price now being paid to an outside supplier	$ 41	$ 103	$ 110*

*Before any purchase discount.

Required:

1. Refer to case 1 shown above. Alpha Division can avoid $2 per unit in commissions on any sales to Beta Division.

a. What is Alpha Division's lowest acceptable transfer price?

b. What is Beta Division's highest acceptable transfer price?

c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer?