Alpha and Beta are divisions within the same company. The managers of both divisions are evaluated based on their own division's return on investment (ROI). Assume the following information relative to the two divisions: Case 1 2 3 4 Alpha Division: Capacity in units Number of units now being sold to outside customers Selling price per unit to outside customers 81,000 401,000 151,000 301,000 81,000 401,000 101,000 301,000 $ 32 $ 92 $ 80 $ 52 Variable costs per unit $ 20 $ 67 $ 45 $ 28 Fixed costs per unit (based on capacity) $ 6 $ 15 $ 20 $ 9 Beta Division: Number of units needed annually 6,000 31,000 21,000 120,200 Purchase price now being paid $ 29 $ 91 $ 80* to an outside supplier *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? 2. Refer to case 2 shown above. A study indicates that Alpha Division can avoid $5 per unit in shipping costs 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? Would you expect any disagreement between the two divisional managers over what the exact transfer price should be? d. Assume Alpha Division offers to sell 301,000 units to Beta Division for $90 per unit and that Beta Division refuses this price. What will be the loss in potential profits for the company as a whole?